Public Policy

Retirement Industry Weighs in on Auto Portability Regulations

As the comment period expires for the U.S. Department of Labor's proposed regulations on auto portability, the retirement industry has weighed in, as reflected in the following media articles:

• PlanAdviser: Chamber of Commerce, ERIC Ask DOL for Modifications to Auto-Portability Proposal
• PLANSPONSOR: Stakeholders Ask for Fewer Regulatory Mandates for Automatic Portability
• NAPA Net: ARA Submits Letter to DOL on Auto-Portability Proposed Regs and PTE (also featured in ASPPA Net)
• BenefitsPRO: ERISA group urges DOL to simplify its new 401(k) 'automatic portability' rule
• JD Supra: How DOL’s Proposed Automatic Portability Regulations Will Affect Defined Contribution Plans
• Business Insurance: ERISA Industry Committee calls for simplification of auto-portability rule
• Ascensus Washington Pulse: DOL Releases Proposed Regulations for Automatic Portability Transactions
• Morgan Lewis MLBeneBits: DOL Proposed Rule on Automatic Portability: Plan Fiduciaries’ Perspective

Changes for Small-Balance Savers

In the March-April 2024 edition of PLANSPONSOR Magazine, Remy Samuels covers developments surrounding small-balance accounts, including the 12/29/23 increase of the mandatory distribution threshold from $5,000 to $7,000, the recent announcement by the Portability Services Network (PSN) of live operations, and the release by Retirement Clearinghouse (RCH) of an updated version of its Auto Portability Simulation (APS). Samuels briefs her readers on all of these developments, and offers a summary of key results from RCH's new APS model.

*Subscription Required

401(k) Plans: Additional Federal Actions Would Help Participants Track and Consolidate Their Retirement Savings

On 2/20/24, the Government Accountability Office (GAO) released a paper entitled: 401(k) Plans: Additional Federal Actions Would Help Participants Track and Consolidate Their Retirement Savings. The paper's organizing principle is the difficulty that many Americans have in keeping track of their retirement savings, and posits that better information on terminated accounts (via a "dashboard" style interface), paired with the ability to easily consolidate all balances via a government-operated consolidation mechanism could deliver benefits to retirement savers. Curiously, the GAO report avoids mentioning the problem of cashout leakage, but does make references to auto portability and the efforts of the Portability Services Network (PSN) for balances under $7,000. The GAO's report was subsequently covered by InvestmentNews and Pensions & Investments.

What’s Around the Corner?

Writing in the 'What's Around the Corner?' feature in the Jan-Feb 2024 magazine edition of PLANSPONSOR, Ed McCarthy asks industry experts where we are with key events and trends, and what's likely to emerge in 2024. McCarthy turns to RCH EVP Neal Ringquist for his views, and Ringquist delivers an update on auto portability, reporting progress in 2023 within the Portability Services Network (PSN), with Alight, Fidelity Investments and Vanguard completing their implementations and focusing on onboarding clients. Looking ahead to 2024, Ringquist notes that PSN's focus will be on "expanding the network of plans and recordkeepers" while achieving operational status for Empower, Principal Financial Group and TIAA. Finally, Ringquist notes the impact of "both the auto-portability provision and the mandatory distribution-limit increase to $7,000 under SECURE 2.0" which will lead to plan sponsor reviews of the new features.

*Subscription required

Policy changes look to reduce 401(k) plan ‘leakage’

CNBC Personal Finance Reporter Greg Iacurci takes a comprehensive look at the problem of 401(k) cashout leakage, as well as its most promising solution -- auto portability, as delivered by the Portability Services Network (PSN). In his analysis, Iacurci turns to industry experts, including RCH & PSN president & CEO Spencer Williams, EBRI's Craig Copeland and other researchers and academics. Iacurci quotes Williams as stating that auto portability is essentially a “very large exchange mechanism” within the 401(k) industry, and that the feature has promise in addressing the cashout leakage problem. Iacurci adds: "at 70% market coverage, auto portability is expected to reconnect about 3 million people a year with 401(k) accounts they left behind upon job change."

Also featured in SkyNews, The Adviser Magazine, USA Today News, and at least 30 other media outlets

How Auto Portability Can Improve Retirement Outcomes For Americans

Financial Advisor Magazine's Russ Alan Prince interviews RCH & PSN president and CEO Spencer Williams, to discuss how auto portability can dramatically improve retirement outcomes for Americans. Williams gives Prince a primer on systemic cashout leakage, how and why the Portability Services Network was created and the key provisions of the SECURE 2.0 Act that address auto portability. Speaking directly to Prince's advisor-based readership, Williams asserts that auto portability is a "no-brainer benefit for their plan-sponsor clients....that can benefit individual clients and make a big difference in the lives of workers saving for retirement across the country over the long term."

'Portability' is set to boost and solidify $9.3 trillion 401(k) system by eliminating cash-outs, rollovers and fragmented (orphaned) plans

RIABiz's Brooke Southall, founder of RIABiz -- described as the "news, vision & voice for the advisory community -- writes about the DOL's "proposed rule [that] would implement Section 120 of the SECURE 2.0 Act" -- known as auto portability. In his piece, Southall voices his own views, and turns to industry experts, all of whom are positive about the recent developments and the future prospects for auto portability. Southall quotes Retirement Clearinghouse (RCH) and Portability Services Network (PSN) president & CEO Spencer Williams on the benefits of auto portability, and writes that large 401(k) recordkeepers "created a consortium for portability among themselves, with the technology of Retirement Clearinghouse."

EBSA’s Lisa Gomez Calls Auto-Portability Key to Retirement Security

PLANSPONSOR's Alex Ortolani reports on commentary from Assistant Secretary of Labor Lisa Gomez, the head of the DOL's Employee Benefits Security Administration (EBSA), who highlighted efforts by EBSA to advance final rules on auto portability. The proposed rules, which hit the Federal Register Monday, initiate a 60-day comment period that will end March 29. Ortolani writes that Gomez "highlighted the [auto portability] provision as one of several into which EBSA is digging in this year."

Also featured in PlanAdviser