401 (K) S has a “portable failure”, which is a problem for employees.

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The 401 (K) system introduced in 1978 indicates that age and is working on important issues.

Currently, only about 50 % of workers can access these plans through employers, according to Laurie Rowley, a co -founder and CEO of retirement solution company ICON, the system is increasingly mobile. It has not been built to respond to.

This caused a major problem with the portability of the account and the lost retirement account. In a recent episode of decoding retirement, Rory emphasized these drawbacks in the US retirement system.

“The portability of the 401 (K) plan has never been built for portable use,” Lauri said. “There are all these patchwork systems that people can use,” she said, but those systems were incomplete.

According to Rowley, if an employee quit the employer in the 401 (K) plan, usually one of the four things will occur.

Some people leave 401 (K). Rowley pointed out that about 25 % of all assets in the 401 (K) plan have been abandoned or lost. This is 29 million who lost the 401 (K) plan. “When they leave there, they have forgotten where it is,” she said.

Others roll the 401 (K) plan to IRA. Approximately $ 800 billion has been deployed from the 401 (K) plan to IRA.

The small segment of the people chooses to involve it in a new employer 401 (K) plan, but in many cases, it is difficult to roll into another employer 401 (K) plan. I said.

Others, employees exchange 401 (k).

“That is my opinion, that’s a portable failure,” she said. “Every time you change your job on where you are in the retirement plan or what kind of investment they make, it is a lot for us to expect them to make these decisions. It is a lot of people. It is the most important asset in my life, and we ask them to change it every few years.

One way to the retirement account owner is that it can deal with “portable” issues. It is to roll 401 (K) into IRA.

“I believe that everybody should maintain a retirement plan with them,” she said. “I think they should take it out of the employer’s plan, put it into IRA, and control it.”

Then she continued, “They know where they are.” “They can monitor investment. They can watch their fees and their portfolio, and they don’t lose their plans … I need to maintain their assets with them through their lives. I think there is.

The story will continue

The Rowley company offers another solution called Portable Retirement Plan (PRP). PRP works as a conventional plan for employees to contribute to the account through salary deduction.

“This is a combination of workplace retirement plan and individual plans,” she said. “I know that saving people through the employer is a really good way for people to build them. [wealth]。 “

Rowley said that the main difference is that PRP eliminates the employer’s cost, complexity, and the responsibility of the trustee, and to make it easier to set up and manage. Under her solution, ICON’s platform has been established, and ICON assumes the trustee responsibility to the individual.

“We can put them in a personalized portfolio adjusted according to their needs, and their savings are the form of IRA, so they directly to their own accounts. I will enter, “she said.

According to Rowley, this approach guarantees that when employees quit their job, they can plan with them and eliminate the need for rollover.

“You don’t have to change your investment,” she said. “There is no need to change anything about the plan. Just cut from the employer, and you can use your next employer.”

Every Tuesday, retired experts and financial educators Robert Powell will provide tools to plan your future. Decoding retirement。 We can find more episodes Video hub Or look at you Priority streaming service。