Many workers don’t move 401(k)s when terminated, study finds

A large number of people let the money in their 401(k) plans languish after they lose their jobs — or simply choose to cash out their retirement accounts once they're terminated — according to a new report released by The Charles Schwab Corp.

Specifically, 43% of the 401(k) assets belonging to participants who were terminated from their jobs in the first quarter of 2008 are still sitting in their former employers' plans, according to data from the San Francisco-based company.

The remaining assets had largely been rolled over into individual retirement accounts, or had been taken as cash distributions, according to Schwab, which analyzed the transactions of nearly 10,000 terminated participants in its Schwab Retirement Plan Services business.

Additionally, 75% of terminated workers that moved money out of their former employers' 401(k) plans have rolled these assets into IRAs, Schwab noted, while another 14% requested cash.

Only 7% of these terminated workers rolled their 401(k) assets over into a retirement plan at a new employer. Four percent used other forms of distribution.