Why saving in a 401(k) plan may be tough for frequent job switchers
Saving in a 401(k) plan may be tough for workers who switch jobs frequently — a dynamic that's come into greater focus amid the Great Resignation.
In 2021, 14% of people saving in a 401(k) plan left their employer, according to a new report from Vanguard Group, which is among the largest retirement plan administrators.
The share is up from 10% in 2017, according to Vanguard. It includes individuals who left their company for another job or venture and those who retired from their employer.
More from Personal Finance:Annuity sales buoyed by market fears, higher interest ratesHow to use a 529 college savings plan if student debt's forgivenHere's how to fight a higher-than-expected property tax bill
Overall, almost 48 million people quit their jobs last year, an annual record. That torrid pace of voluntary departures has continued in 2022.
There has been historic churn in the labor market as job openings surged to all-time highs and employers raised wages at the fastest pace in decades to compete for talent — enticing workers to seek out new opportunities elsewhere.
The mechanics of certain 401(k) plans mean many new hires can't continue saving in their new workplace plan right away. And if your new employer offers a 401(k) match, those funds may take a few years to fully belong to you.
«Participants are changing jobs more frequently and may risk retirement savings interruptions,» according to Vanguard, which based its analysis on 1,700 workplace retirement plans with 5 million participants.
In 2021, 72% of 401(k) plans allowed new hires to start saving immediately, according to Vanguard. The remainder had a waiting period of at least a month before employees could save; of them, 8% required one year of service.
Many
Read more on cnbc.com
