Encouraging Retirement Plan Balance Rollouts

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Today we will be discussing how to encourage ex-employees to rollout their retirement plan balances.

Sometimes, after leaving a job, we might forget about the money we've saved in our 401(k) plans. If you've ever changed jobs, you'll know it's easy to lose track. However, companies have strategies to help ex-employees manage these funds.

One strategy is the IRS's safe harbor solution. If ex-employees have less than seven thousand dollars in their retirement plan, the company can send them a notice. If after 30 days they don't move their funds, the company can transfer this money to an IRA in their name. This makes sure small amounts aren't left forgotten.

For amounts over seven thousand dollars, the company can't move the funds automatically. But they can suggest moving them. Best practice is to tell the employee about this when they're leaving. If they decide to wait, the company should keep reminding them. This reduces the chance of them losing touch with the company and their money. Having a financial advisor to guide ex-employees can also be very helpful.

The bottom line is that Companies have ways to help ex-employees manage their retirement funds, ensuring no money is left unattended.

For more information on how to best encourage ex-employees to rollout their retirement plan balances, contact us today.