Defined contribution (DC) plans, such as 401(k),403(b) and 457 plans, are the bedrock of the American retirement savings system. However, DC plans have been used primarily to accumulate wealth, and Americans generally roll their DC balances into Individual Retirement Accounts (IRAs) upon retirement.
Reducing rollovers could significantly improve retirement outcomes, especially given the ongoing innovation in the in-plan retirement income space. Staying in DC plans could be beneficial for participants with fewer savings and limited access to professional advice.
Based on a survey of 1,003 full-time workers, ages 55 to 65, we find that plan sponsors play a significant role in whether DC participants “stay or go” in the DC plan at retirement, and reducing rollovers has the potential to improve retirement outcomes for millions of Americans, especially as the in-plan retirement income space continues to evolve.
PGIM DCS - 4798970
David Blanchett
Managing Director, Portfolio Manager and Head of Retirement Research
PGIM DC Solutions
david.blanchett@pgim.com
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