401k consolidation blog posts


Nov
11
2024

Dressing Up Traditional Automatic Rollovers

Writing in the Consolidation Corner blog, RCH’s Tom Hawkins describes learning about the existence of so-called “world-class” automatic rollover IRA services which lay claim to unspecified, premium features. In his article, Hawkins characterizes them as “old-school, traditional automatic rollover IRAs” which place participants in high-fee, safe harbor IRA “landfills” where their small balances languish. What’s needed, writes Hawkins, is “not faux fancy features – it’s a low-fee, transitional safe harbor IRA that preserves small-balance retirement savings for only as long as they can be consolidated into a current-employer’s plan or into another IRA.”

Oct
16
2024

Leakage & Shrinkage: Two Brothers from the Same Mother

Writing in the RCH Consolidation Corner blog, Tom Hawkins compares and contrasts cashout leakage with “shrinkage” – a related phenomenon newly identified by Vanguard in their September 2024 study: Job transitions slow retirement savings. Although the Vanguard study does not specifically use the term “shrinkage” – their study refers to a decline in retirement savings rates that occurs when individuals transition between jobs, leading to sub-optimal retirement outcomes. Hawkins also finds it intriguing that the Vanguard study identifies auto portability as a potential solution for the shrinkage problem, promoting better retirement outcomes for workers.

Sep
05
2024

Four Compelling Reasons for Plan Sponsors to Adopt Auto Portability

Writing in the Consolidation Corner blog, RCH's Tom Hawkins offers plan sponsors four compelling reasons to adopt auto portability. Hawkins cites the groundswell of support that auto portability has already received from the retirement industry, from legislators and regulators, as well as the thousands of plan sponsors who have already adopted, advising plan sponsors that they need not fear "being first" when they adopt. By adopting, they'll be acting in their plan's best interests and in the interests of its participants, who've expressed a strong desire for the new feature.

Jul
17
2024

Auto Portability Adoption Picks Up Steam

RCH EVP Neal Ringquist examines recent developments surrounding auto portability, which is now in the early stages of plan sponsor adoption. Ringquist writes that plan sponsor adoption “has begun to pick up steam” and shares results that “over 3,300 plans – representing almost 1.4 million active participants” have adopted auto portability via their PSN-affiliated recordkeepers. Ringquist credits PSN recordkeepers with leading the way, while citing a recent article about the Unum Group that provided an innovative plan sponsor’s perspective on the new feature. Looking ahead, Ringquist envisions auto portability becoming a “must-have” feature for sponsors and recordkeepers and expects “more adoption ahead – a lot more.”

Jun
17
2024

Safe-Harbor IRAs Don’t Offer a Long-Term Saving Solution for Plan Participants

Writing in the RCH Consolidation Corner blog, RCH and PSN President & CEO Spencer Williams reflects on the 20-year history of safe harbor IRAs, which were intended to be "a temporary solution to the problem of too many small, stranded accounts in defined contribution plans." Williams provides readers with examples of the dysfunction that has occurred when safe harbor IRAs have failed to act as long-term repositories of savings, or worse, when participants cash out completely. With the advent of auto portability, Williams maintains that the new auto feature will "allow participants to maximize the time retirement savings are invested in their plan accounts—and minimize the time those balances are languishing in underperforming safe-harbor IRAs along the journey to retirement."

Jun
07
2024

The Truth About Old-School Automatic Rollovers

Writing in the Consolidation Corner blog, RCH’s Tom Hawkins takes on “old-school” automatic rollover programs which produce massive amounts of cashout leakage and strand millions of participants’ balances in safe harbor IRAs. While old-school automatic rollovers have one foot in the past, Hawkins writes: “automatic rollovers that incorporate auto portability are the way of the future, with the industry-led Portability Services Network leading the way forward.” For plan sponsors, contends Hawkins, “auto portability delivers all the plan optimization features of old-school automatic rollover programs but goes one key step further” by automatically rolling-in eligible balances for new plan participants.

May
08
2024

Harness the Power of Retirement Savings Consolidation

Consolidation is a powerful force in our world, and when it comes to retirement savings, 401(k) account consolidation is inherently efficient and exerts a protective effect on retirement savings as participants change jobs. Writing in RCH’s Consolidation Corner blog, Tom Hawkins offers readers six key facts about retirement savings consolidation, providing ample evidence on the efficacy of consolidation in improving participants’ retirement outcomes.

Mar
13
2024

This Earth Day, We are Reminded to Recycle 401(k) Savings, Instead of Adding to the Landfill of Safe Harbor IRAs

On April 22, we will celebrate the 54th annual Earth Day, which gives us the opportunity to celebrate our planet’s natural surroundings and contemplate how we can help preserve them. The advent, and ongoing expansion of recycling programs has enabled our society to reduce our waste—and although there is still quite a long way to go, we have evolved significantly from the post-World War II throwaway culture. Writing in the RCH Consolidation Corner blog, RCH President & CEO Spencer Williams uses the occasion of Earth Day to extend the recycling concept to our nation's 401(k) system, where auto portability can facilitate the emergence of a more sustainable paradigm, increasing retirement security for millions of Americans.

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