Employees who choose to roll retirement money into an IRA risk losing key features from within the employer-provided system, which can significantly impact long-term savings goals.These benefits include:
- Enhanced purchasing power—Because larger defined contribution (DC) plans have hundreds or thousands of participants and assets of tens of millions of dollars or more, enhanced purchasing power allows them to offer institutional class investment products to employees at a lower cost for similar products than an individual would purchase on their own in an IRA.
- Access to unbiased tools and resources—These tools often include education, modeling tools, online advice, managed accounts, lifetime income solutions and access to experienced phone representatives. Like the investments, these are usually offered a much lower cost than what is available to individuals outside of the employer system. In addition, employees who also have a defined benefit (DB) plan with their employer benefit from integrated modeling tools that allow them to better manage their retirement savings.
- Employer expertise—By participating in a qualified plan, workers benefit from the fiduciary oversight and expertise of the plan sponsor and often outside experts in areas such as selecting investment options and reviewing plan design alternatives.