Liz Weston: Does a 401(k) employer match tempt you to cash out?
Too many people cash out their 401(k)s when leaving a job — and part of the problem may be generous employer matches, researchers have found
Many companies try to help their workers to save for retirement. Employers often offer 401(k)s, company matches and automatic enrollment to encourage saving.
Much of that effort goes to waste, though, when employees leave. A study published last year in Marketing Science, a peer-reviewed research journal, found more than 40% of departing workers cashed out at least part of their 401(k)s, and most of those drained every dime.
What’s more, employers may bear at least some of the blame, according to researchers Yanwen Wang of the University of British Columbia, Muxin Zhai of Texas State University and John Lynch Jr. of the University of Colorado.
The study, titled “Cashing Out Retirement Savings at Job Separation,” suggests generous company matches can make cashing out more tempting.
