Since Congress created 401(k) plans in 1978, they have become the most popular retirement account in the U.S. One-third of workers had a 401(k)-style account in 2020, roughly double the number with an individual retirement account and triple those with a pension. While 401(k)s started as a way to build wealth for retirement, they are increasingly being used by retirees to manage their life savings.
“More and more retirees are interested in staying connected with former employers whom they trust,” says Tom Armstrong, vice president of customer analytics and insight at Voya Financial in Walpole, Mass. Armstrong says that thanks to large-group pricing, keeping your money in the old 401(k) could help you qualify for lower investment fees than if you invested on your own by transferring the balance to an IRA.
