Insight: Outdated 401(k) rules are shortchanging Americans

Many company 401(k) retirement savings plans could use a swift kick into the 21st century, according to a new report from the U.S. Government Accountability Office.

A number of longtime 401(k) plan designs fail to reflect a new, more mobile workforce and hurt employees' ability to save, the report says.

Among the arguably outmoded practices: A requirement at some plans that workers be 21 before becoming eligible to join a 401(k), that employees finish one year of service before being eligible to join a plan and then wait another year to be eligible for company matching funds, and that employees wait up to six years before laying claim to all those contributions.

Some of those practices save companies administrative hassles when workers leave after only a short time, and others help reduce turnover, employers and retirement experts told the GAO. But as the report notes, Bureau of Labor Statistics data show the median tenure at 4.1 years for private sector workers in 2014, and federal data found that, for workers between ages 18 and 48, the average number of jobs held was more than 11.

"Being ineligible to save in a new employer's plan for one year on 11 occasions, especially occurring more frequently early in a worker's career, may result in $411,439 less retirement savings," according to the GAO's projections.

The GAO stressed that its report focused on a limited number of 401(k) plans, 80 in total, ranging from ones with fewer than 100 participants to some with more than 5,000.

But many of the observations taken from the 80 funds it focused on were echoed in industry data included from sources including Vanguard Group and the Profit Sharing Council of America.

Vanguard data showed more than 55 percent of its plans have vesting policies for matching contributions, with the most common being a five-year requirement. Vesting policies may appeal to employers for reasons that aren't immediately obvious. If an employee leaves before they are fully vested in an employer match, that forfeited amount of money can, and often does, go to either lessen the amount the company needs to contribute to the company match, or goes to lessen employer expenses for the plan.