Consolidation Corner

For Earth Day: Consider How "Recycling" Could Apply to Our Retirement System

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 is 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 have clearly come a long way since the "throwaway" culture that emerged following World War II.

Five Common Misconceptions About Automatic Rollovers

Automatic rollover programs allow plan sponsors to force out of their plan separated participants with balances less than $5,000 into a Safe Harbor IRA. These programs can be quite effective at helping sponsors resolve many of the problems associated with housing small-balance accounts in-plan, such as...

The Fiduciary Rule and Participant Transition Management

America’s Modern Throwaway – 401(k) Retirement Savings

When trying to shape our future, it is often helpful to understand our past.

Small Balance Cash-Outs: The Easy Choice Is Not The Right One

In a previous blog post, we asked, "Why dump mandatory distributions in a landfill when you can recycle?" As we wrote then, sponsors exercising their authority to automatically roll over separated participants' small balances into safe harbor IRAs' without encouraging participants to take their retirement account savings with them at the point of job change, or facilitating "auto portability" to make plan-to-plan asset transfers a seamless process' are doing themselves and their participants a disservice in the long run.

Washington Recognizes Need for Retirement Plan Portability Solutions

Clearly, Washington DC is now "getting it" when it comes to retirement plan portability. In November 2015, Senator Patty Murray and other influential members of Congress delivered a letter to Department of Labor Secretary Perez urging action on Auto Portability. Now, we have strong comments from President Obama in his final State Of The Union address on the need for more portable retirement savings.

Auto Enrollment: The Unintended Consequences, Part II (Research)

In his December 1, 2015 article (The unintended consequence of 401(k) auto-enrollment), RCH CEO Spencer Williams exposes the linkage between auto enrollment and lower average account balances. Based on Form 5500 data, Williams' analysis presents some excellent examples of industries where average balances are significantly lower in plans that have adopted auto enrollment compared to plans that have not. RCH's Tom Hawkins follows up that article with his own analysis, extending Williams' earlier work.

As 401(k) Cash Out Leakage Grows, So Does Need for Auto Portability

In his December 11th article in BenefitsPro (Addressing the Critical Problem of 401(k) Cash Outs), Nick Thornton draws much-needed attention to the magnitude of the 401(k) cash out leakage issue, due to the frictions associated with account portability when plan participants switch jobs. Thornton's article rightly emphasizes the need for automated portability similar to automatic enrollment and deferral increases - to effectively address the cash out problem.