Public Policy

The 401(k) ‘House-Cleaning’ to Come

The increase in the automatic rollover threshold from $5,000 to $7,000, as provided for in section 304 of the SECURE 2.0 legislation, will become effective for mandatory distributions made after December 31, 2023. What will be the impact of these provisions, if fully embraced by plan sponsors? One thing is certain – on both a one-time and ongoing basis, far more terminated participants will be subject to the automatic rollover provisions of their former-employers’ plans. Writing in 401k Specialist, RCH's Tom Hawkins explores the impact of an increased threshold that, when paired with the advent of auto portability and the operational status of the Portability Services Network (PSN), could mean that small balance terminated participants will finally come out on top.

Rapid Change, Real Momentum: Assessing America’s Progress Toward Inclusive Retirement Savings

In October 2022, policymakers, financial services executives, academics, advocacy leaders, and financial technology innovators gathered for the sixth annual Aspen Leadership Forum on Retirement Savings. An in-person event for the first time since early 2020, this Forum set out to advance solutions to ensure that everyone in America can benefit from our retirement savings system. The just-released report from that meeting identifies retirement plan portability as vital to addressing the problem of job-changing and cashout leakage, and the report heaps superlatives on the newly-formed Portability Services Network, an industry-led consortium dedicated to the adoption of auto portability.

This simple way to fix the wealth gap between Blacks and Whites is far better than reparations

Fox News Senior Political Analyst Juan Williams, prominently featured on live network TV, writes a FoxNews.com opinion piece, where he profiles entrepreneur Robert L. (Bob) Johnson's "better idea" for closing the racial wealth gap -- auto portability. Williams heaps praise upon Johnson and auto portability, which was brought into existence following Johnson's hire of "a veteran retirement industry executive, Spencer Williams, to create the structure for seamless transfer of 401(k) accounts." In the piece, Williams characterizes auto portability as being able "to increase Black wealth through current economic rules instead of placing distant hope in some day seeing reparations."

Also featured in MSN Money

Broadcast Retirement News: Set It and Actually Forget It

In Broadcast Retirement News' segment #1257, anchor Jeff Snyder interviews Laura Quinsby, Center for Retirement Research, Boston College. The segment focuses on recent developments that will allow terminated participants to better track and consolidate their retirement savings, including the new SECURE 2.0-mandated lost-and-found registry, as well as auto portability. Snyder mentions the formation of the auto portability "consortium" or the Portability Services Network (PSN) as a positive development, while Quinsby opines that one indicator of auto portability's success will be an eventual decline in the number of terminated, vested defined contribution accounts, brought about by account consolidation.

Retirement: A new option for job changers

Writing in Kiplinger's Money Power, senior editor Sandra Block examines the plight of job-changing 401(k) participants, who either cash out or strand millions of retirement accounts, and identifies auto portability -- delivered via the Portability Services Network -- as a promising solution. Describing how auto portability will work, Block cites Steve Holman, a principal in Vanguard’s Institutional Investor Group, and Greg Long, head of public policy for Alight Solutions.

A (Really) Surprising Reason for High Retirement Plan Leakage

NAPA Net's John Sullivan delves into recent cashout leakage research that finds a correlation between more-generous employer matching contributions and higher incidences of leakage. Sullivan also examines auto portability, turning to RCH president & CEO Spencer Williams, who addresses the Portability Services Network (PSN), a newly-formed "independent entity that acts as a utility" to foster adoption of the new automatic feature. Williams provides updates on PSN's recordkeeper membership, and states: "[w]e expect to have the beginnings of reportable activity by the end of the year.”

Secure 2.0 Creates an Important Opportunity to Improve Retirement Savings Portability

Writing for Georgetown University's Center for Retirement Initiatives (CRI), retirement and investment expert Catherine Reilly assesses the impact of recent policy reforms, including the passage of the SECURE 2.0 Act in December 2022, which "provide an opportunity to significantly improve retirement savings portability to the benefit of participants, employers, and retirement plan providers." Reilly notes the pitfalls facing retirement savers trying to build wealth, including the difficulties in consolidating multiple retirement savings accounts, which increases the prevalence of cashing out. Reilly notes the formation of the industry-led Portability Services Network, along with provisions of SECURE 2.0 that provide a safe harbor for adopting auto portability, and concludes with a call-to-action, writing: "Now is the time for the U.S. to get it done. Facilitating portability and account consolidation are two of the most important ways to boost retirement savings and enhance the effectiveness of current and future policy reforms."

30th Anniversary: Plan Access

In PLANSPONSOR's March-April online magazine, reporter Debbie Carlson chronicles the key regulatory developments that have provided employees with greater workplace retirement savings plan access. Carlson devotes a section to auto portability, providing readers with a timeline of key events dating back to 2001, when EGTRRA spawned automatic rollovers, as well as more contemporary developments surrounding the formation of the Portability Services Network (PSN). Carlson turns to RCH executives Spencer Williams and Neal Ringquist, who supply projections for the expansion of PSN's network. Also supporting auto portability's efficacy in stemming cashout leakage is Morningstar's Jack VanDerhei, a respected retirement researcher and formerly of EBRI.

Also featured in the PLANSPONSOR March-April Magazine Edition