EBSA Proposes Auto-Transfer of Retirement Accounts

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The Employee Benefits Security Administration (EBSA) is seeking public commentary on a proposal to allow for the automatic transfer of 401(k) funds into an IRA or into another company’s 401(k) when a worker loses or changes jobs.

Frequently, employees leaving their current place of employment with account balances in the company’s 401(k) plan either take a distribution of their retirement savings or move the account into an IRA. The same outcome often occurs with small retirement accounts when a company terminates its 401(k) plan.

According to the agency, an auto-portability program would improve asset allocations by consolidating small retirement savings accounts, eliminate duplicative fees for small retirement savings accounts, and reduce leakage of retirement savings from the tax-deferred retirement saving system.