The review will provide departing employees with private, one-on-one meetings with a Financial Engines financial planner. “By learning about the employee’s situation and goals, the planners are able to apply their deep knowledge of the employer’s 401(k) plan to give the employee recommendations that are in the employee’s best interests.”
Employees will get personal advice that takes into account “accurate forecasts of post-retirement income, including Social Security benefits and in-plan income options, to help them achieve their financial goals, while plan sponsor fiduciaries achieve closer alignment with their business objectives,” the firm said in a release.
Beyond leaving funds in their current plan, departing employees can withdraw the funds from their 401(k) account, roll the money to their new employer’s plan or roll the money to an IRA.
One reason many workers make the wrong choice is because they don’t seek the advice of a trusted financial advisor, the firm asserts.
Among all respondents, most (69%) have not consulted a financial advisor about their distribution options, the new survey found.
Among those who withdrew money from a 401(k) before their retirement, a quarter (26%) got no information or help from any resource.
Demonstrating the value of obtaining advice from a financial planner, nearly 80% of those who did consult a financial advisor said they felt more confident about their distribution strategy.
More than four-in-10 individuals (42%) between ages 35 and 65 who left a job where they had money in a 401(k) plan were unaware that it might have been possible to keep their money in the plan, Financial Engines found.
More than one in four (28%) didn’t know that some retirement distribution choices trigger tax liabilities and penalties.
Additionally, half of respondents (51%) were not aware that they might be able to move money from IRA accounts into their employer-sponsored 401(k) plan, the survey found.