KEY POINTS
  • 401(k) plan "leakage" is when workers take their savings out of the tax-preferred retirement system.
  • Workers cash out billions of dollars from 401(k) plans each year when they change jobs.
  • Recent legislation and a new consortium of plan administrators aims to stop leaks, especially from small 401(k) accounts.

Leaks aren't just a problem for pipes.

Billions of dollars a year drip from the U.S. retirement system when investors cash out their 401(k) plan accounts, potentially crippling their odds of growing an adequate nest egg.