When it comes to making decisions about their 401(k) plans, many employees are unaware or misinformed about their potential options when leaving the employer. According to a new survey by Financial Engines, 70% of workers with 401(k) accounts haven’t talked to a financial advisor before making financial decisions and distributions. Even more surprisingly, four in 10 individuals who left a job where they had money in a 401(k) plan were unaware that it might have been possible – and even advantageous – to keep their money in their former employer’s plan.
Financial Engines found that of those who withdrew money out of their 401(k), nearly 70% didn’t consult a financial advisor about their distribution options. A quarter (26%) of those employees did not seek information or help from any resource. However, those who consulted a financial advisor felt more confident about their distribution strategy. Speaking with a financial advisor can help employees learn more about their retirement plan options, avoid tax liabilities and penalty fees, and make better decisions so they achieve their retirement goals.
Financial Engines is once again leading the way for plan sponsors concerned about ensuring the long-term financial health of their workers. Its new Fiduciary Distribution Review service helps employees retiring or leaving their jobs make informed decisions about their separation benefits, retirement plan distribution choices, and in-plan income options – free from bias or product conflicts of interest. By providing departing employees private, one-on-one meetings with a Financial Engines financial planner, this new, highly personalized and holistic service takes into account accurate forecasts of post-retirement income, including Social Security benefits and in-plan income options, to help employees make the right decisions to achieve their financial goals.
The new Fiduciary Distribution Review service is yet another example of how Financial Engines is expanding the fiduciary zone beyond the 401(k) plan. By working with a planner who’s acting in your best interest, employees can greatly reduce their risk of making a costly mistake. Most important, employees can be confident they’re in the best possible position to achieve their financial goals.
View the infographic and read other insights from our whitepaper Reconsidering the 401(k) Rollover below: