Cashout rates among participants in 401(k) plans for which Fidelity Investments is record keeper remain persistently high, reaching 35% as of the nine months ended Sept. 30, according to a Fidelity news release Thursday.
The rate of people cashing out their 401(k) accounts when leaving a job is most noticeable among workers ages 20 to 39 at 41%. “With the average cashout value at nearly $16,000, many 401(k) investors are forfeiting years of potential investment growth and retirement cash flow,” according to the release.
The cashout rate “has been rather flat over the past five years, remaining at about a third of participants taking such action,” Charles Kabat, a Fidelity spokesman, said in an e-mail.
Fidelity also reported Thursday that the average balance of its 401(k) participants rose to $89,300 at year-end 2013, up 15.5% from the previous year-end balance. Mr. Kabat wrote 78% of the account balance gain was due to “positive stock market momentum” and that 22% of the gain was attributed to employee and employer contributions.
For participants who were continuously active in their 401(k) plans for the past 10 years, Mr. Kabat wrote 56% of the gain in their average balance was due to market forces and 44% was due to contributions.
