By Neal Ringquist
In his April 1st, 2016 article in MarketWatch, RCH’s CEO Spencer Williams describes the sting that retirement savers feel -- not once, but twice -- when they choose to cash out their 401(k) savings.
To Illustrate his point, Williams cites a 2014 Fidelity Investments report calculating the impact on a 30-year-old who elects to cash out a $16,000 401(k) account, forgoing more than $145,000 in retirement savings! To add insult to injury, that same person wouldn’t actually receive the entire $16,000 sum – taxes and early withdrawal penalties will take another $4,800 right off the top!
While leaving hard-earned savings behind is certainly a better choice than cashing out, participants will still lose money over the long-term by paying administrative fees for each account remaining open. Williams advises participants to consolidate their old accounts through roll-ins, adding that many plans will offer their participants roll-in assistance, overcoming the perception that the roll-in process could take too much time to complete.
Read the full MarketWatch article here.