GAO is concerned over notices

According to a new Government Accountability Office (GAO) report, only a third of plan participants receive an important notice that could help them make a decision about their retirement savings.

The GAO claims that about 80% of eligible 401(k) participants aren’t aware of all four of their distribution options after terminating employment, which are 1) if above the plan cash out limit, leave the retirement savings in the former employer’s plan, 2) roll the money to the new employer’s plan, 3) roll the savings into an IRA, and, 4) take a lump sum taxable distribution.

My two cents are that it’s the result of the legalese of the 402(f) notice that participants are supposed to get. I always felt it’s written an ERISAese and an executive summary for someone who isn’t a tax expert would go a long way.

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