401(k) Rollovers and Financial Literacy

Abstract

When leaving their jobs, many individuals in the United States roll their retirement savings into individual retirement accounts instead of leaving them in their 401(k) accounts. IRAs can have higher fees, which over time can reduce an individual?s overall retirement savings. This report offers the U.S. Government Accountability Office an overview of individuals? knowledge of the fees associated with IRAs and 401(k)s, the transparency of these fees, and the relationship between financial literacy and the decision to roll over. The authors recommend further research and enhanced fee disclosure requirements.