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Auto Portability - Recent Developments
Find the most-recent auto portability media coverage and developments.
‘Billions of dollars get left behind’: The 401(k) industry now has a ‘lost and found’ for your old retirement accounts
CNBC personal finance reporter Greg Iacurci examines this week's announcement that a retirement industry-led consortium, collectively accounting for 40% of 401(k) savers, has been formed to accelerate the adoption of auto portability. Iacurci turns to Fidelity's Dave Gray for color on the consortium, and Gray underscores the importance of preserving small balances within the retirement system, growing the consortium's footprint and operating the new entity at a break-even price.
ERISA expert Christine Roberts, writing in the 'E is for ERISA' blog, develops a Q&A "geared for plan sponsors who are curious about the auto-portability process and how it might prove beneficial to their plan participants." Roberts writes: "[a]uto-portability can prove especially useful in industries with lower wages and high employee turnover, which may include retail, transportation, hospitality, and restaurants, because this can often lead to numerous account balances of $5,000 or less being involuntarily rolled to default IRAs" while also noting that "SECURE 2.0 proposals could increase the involuntary cash-out threshold to $7,000, which could expand the potential market for auto-portability solutions."
In an opinion piece for The Hill, U.S. Senators Tim Scott (R-SC), and Sherrod Brown (D-OH) team up to make a convincing bipartisan case for auto portability, which the legislators are seeking to further with the Advancing Auto Portability Act of 2022, provisions of which were subsequently incorporated into a broader Senate bill. Scott and Brown view auto portability as an urgent and necessary remedy to the problem of cashout leakage, writing that auto portability "would solve this [leakage] problem by allowing workers to automatically roll over savings from their previous employer to a new employer." They close with an appeal to fellow legislators, writing: "[w]e encourage our colleagues to support this bipartisan, commonsense legislation that will create a more secure financial future for American workers, and save people precious time and money."
The 401kWire's Andrew Lusk conducts an extensive interview with Alight Solutions EVP Alison Borland and RCH president & CEO Spencer Williams, who provides their analysis of what the new retirement industry-led consortium means for the go-forward adoption of auto portability. The title of the piece is a direct quote from Borland, who urged other recordkeepers to join the consortium, adding that the auto portability model was "an all-inclusive experience" for clients and represented "a very low lift" in terms of implementation and operation.
401kWire reporter Andrew Lusk covers the announcement of the new industry-led consortium to accelerate the adoption of auto portability, quoting many of the principle players in its formation, including Dave Gray & Kevin Barry (Fidelity), Spencer Williams (RCH), John James (Vanguard) and Alison Borland (Alight Solutions). In an impactful quote, Fidelity's Dave Gray states: "[t]his is the first time in the history of the 401(k) industry that competitors have come together to solve a long-standing problem. We know that this solution will be to the benefit of millions of Americans year-over-year, in perpetuity."
Newsmax Finance covers the news that "three major 401(k) providers --Fidelity, Vanguard and Alight Solutions—have partnered with Retirement Clearinghouse (RCH) to enable workers’ 401(k) savings to be automatically rolled over to a new employer’s plan."
NAPA Net, affiliated with the American Retirement Association, covers the announcement of the initial formation of a first-ever retirement industry-led consortium in support of auto portability, and including Fidelity, Vanguard and Alight Solutions. The NAPA Net piece covers the essential elements of the announcement, while also referencing pending U.S. Senate legislation that could also have a significant impact on auto portability, if passed.
The 401k Specialist Magazine's Managing Editor Brian Anderson writes that "401k auto portability took a huge step forward today" with the news that "Fidelity Investments, Vanguard, Alight Solutions and Retirement Clearinghouse (RCH) have established an industry-first consortium to accelerate nationwide adoption" of auto portability. Anderson notes that the group aims to "govern the network as an industry utility designed with the goal of operating at the lowest cost to workers participating in auto portability."