More Workers Rolling over Retirement Savings at Job Change

According to a press release, the study, “Lump Sum Distributions at Job Change,” found the percentage of those rolling over their most recent lump sum distribution to another tax-qualified retirement plan increased to 44.3% through 2006, compared with 19.3% of those who received their most recent distribution through 1993.

The percentage of lump sum recipients whose most recent distribution went entirely for consumption was 9.2% for distributions received through 2006, compared with 22.7% for those who received distributions through 1993.

However, the study also found that about 60% of those who took a lump sum distribution did not roll all of it into tax-qualified savings. While some of the assets were spent purely on consumption, some also was used for home purchases, starting a business, or paying down debt, the press release said. Individuals up to age 65 and those with higher balances were more likely to roll over their assets.

Other study findings included:

• Through April 2006, about 16.2 million working-age Americans reported ever having received a lump sum distribution from a retirement plan when changing jobs. The average amount of these distributions was $32,219 (in 2006 dollars) and the median amount was $10,000.
• Just over 21% of the distributions were less than $2,500. Just over 16% were $50,000 or more. The rest of the distributions (about 63%) were between $2,500 and $50,000.

The study can be found in the January EBRI Notes at www.ebri.org.