Safe Harbor IRA Landfill vs. RCH Recycle Auto Portability

By Thomas Hawkins | April 22, 2016

As we observe the 46th annual Earth Day this April 22nd, we appreciate the awareness that this event has brought to the need to protect our environment, the urgency that it’s instilled in all of us, and the tangible results that have been achieved in so many important areas. Although we have much work to do, we’ve clearly come a long way since the “throwaway” culture that emerged following World War II.

As we consider what we can do to sustain our planet, please keep in mind the waste that occurs in our retirement system, where a slow-motion train wreck of 401(k) cash outs deprives millions of Americans of a comfortable retirement.

The good news is that we’ve begun to wake up to the problem. We know what causes cash outs, and we know how to prevent them. The solution is straightforward: improving retirement savings portability so that moving our retirement savings is as easy as cashing out.

We’re also making progress, particularly with Auto Portability, the retirement savings portability solution for job-changing participants with less than $5,000. Auto Portability essentially “recycles” these small-balance accounts back into the 401(k) system, ensuring that retirement savings follow the participant to their next plan.

I’ll leave you with a statistic: EBRI estimates that a 50% reduction in defined contribution cash outs would add $1.3 trillion to our retirement savings, in just 10 years. That’s right: $1.3 trillion!

It’s within our reach.