Offboarding Employees from Your 401(k) Plan
A full two-thirds of employees don’t receive guidance on managing their retirement plan benefit while offboarding. Leaving 401(k) or 403(b) balances behind can result in orphaned accounts that sit unmonitored and unmanaged by participants for years — as opposed to remaining an active part of their retirement planning.
But this type of neglect can also hurt organizations, which are required to continue servicing such accounts — and pay for those services. And a fiduciary’s obligations can increase significantly should a participant eventually “go missing.” While there are reasons an organization may prefer retaining past employees’ funds, such as access to lower fees for larger plans, it’s nonetheless important to advise participants appropriately about managing their retirement accounts upon termination for reasons you may not have even considered.
