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Auto Portability - Recent Developments
Find the most-recent auto portability media coverage and developments.
In her 6/10/19 column in The Wall Street Journal, Bailey McCann examines pending regulation from the U.S. Department of Labor on the RCH Auto Portability program, designed to reduce leakage and "help workers bring their retirement accounts with them as they change jobs." McCann quotes RCH founder, President & CEO Spencer Williams, and credits RCH for "develop[ing] the platform that would do the automatic transfers." Also expressing their support are Matthew Drinkwater, Director of Retirement Research at the LIMRA Secure Retirement Institute, and Alicia Munnell, Director of the Center for Retirement Research at Boston College.
In an article published on the Women's Institute For A Secure Retirement's (WISER) blog, RCH guest author Tom Hawkins describes the ill effects women face when they prematurely cash out their 401(k) balances. Not only do these cashouts jeopardize a safe & secure retirement, Hawkins cites research showing they'll regret the choice, and this regret will build over time. Women should only consider cashing out when faced with a true financial emergency, says Hawkins, and auto portability should help facilitate consolidation of retirement savings for women, as the feature is adopted.
In the 5th installment of his five-part series featured in 401K Specialist on "How Auto Portability Serves Participants' Best Interests", RCH's Tom Hawkins examines how auto portability can mitigate retirement savings cybersecurity risks. Auto portability, writes Hawkins, employs the simple-but-powerful principle of consolidation to lower cyber-risk by 1) reducing the cyber-threat attack surface, 2) minimizing fraud-prone, small-balance retirement savings accounts and 3) securely moving retirement savings forward.
In the 4th installment of his five-part series in 401kSpecialist, RCH's Tom Hawkins examines how a program of auto portability can enhance 401(k) participants' financial wellness. To make his case, Hawkins identifies three ways auto portability promotes financial well-being, including: 1) preventing unnecessary 401(k) cashouts, 2) helping 401(k) participants clear the "$10,000 hurdle" and 3) simplifying retirement planning.
ASPPA Net's John Iekel covers EBRI Research Director Jack VanDerhei's 5/1/19 presentation before the PSCA National Conference, where VanDerhei provided an update on auto portability's benefits, as calculated in EBRI's Retirement Security Projection Model (RSPM). According to Iekel, VanDerhei asserted that "introducing auto-portability for participants who are Gen Xers reduced retirement savings shortfalls for couples regardless of which dies first, and for single people regardless of gender."
Also Featured in NAPA Net (link)
The Penny Hoarder's Sarah Kuta runs down the options facing 401(k) participants when they change jobs, including 1) leaving their savings in the plan, 2) rolling into a new employer's plan, 3) rolling over to an IRA and 4) cashing out. When it comes to cashing out, Kuta warns participants against this damaging behavior, citing a 2017 report by Retirement Clearinghouse, entitled "The Fundamentals of 401(k) Cashout Leakage" which takes a comprehensive view of America's 401(k) cashout leakage problem.
In his capacity as Head of US Defined Contribution and Financial Wellness Research, Mercer's Neil Lloyd notes the recent emergence of serious industry dialogue on plan-to-plan retirement savings portability. Long a proponent of portability, Lloyd recognizes the inherent problems associated with holding multiple retirement saving accounts. In his piece, Lloyd strongly advocates for auto portability, stating that it "might be the solution to less efficient small-balance accounts." Lloyd goes further, opining that auto portability should be considered a legislative priority, writing that "SECURE ACT 2 will be vastly improved if provisions further supporting auto-portability are included."
401kTV's Steff Chalk examines the issue of 401(k) cybersecurity, specifically focusing on the benefits of auto portability in the management of cybersecurity risk. Referencing RCH President & CEO Spencer Williams' recent article in Employee Benefit News, Chalk states that "the technology that makes 401k auto-portability possible may also enhance existing industry best practices that protect plan participants’ personal data." Chalk also adds that "plan sponsors [should] embrace 401k auto-portability to lessen the instances of small-balance accounts and missing participants."