Economic Program | Idea Brief

Auto-Consolidation of 401(k) Accounts

by Anne Kim and Ryan McConaghy

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Today’s workers expect to hold multiple jobs over the course of their careers. But one complexity they may not expect is to manage multiple retirement accounts as they move from employer to employer. Moreover, nearly half of all workers cash out their 401(k) accounts when they leave a job—despite the hit to their retirement security and the penalties they must pay. To diminish this problem and help middle-class Americans better manage their retirement savings, Third Way proposes the automatic roll-over and consolidation of 401(k) accounts into a master IRA for workers who leave one job for another.

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