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Auto Portability blog posts
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.
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.
A More-Enlightened Approach to Uncashed Distribution Checks
No retirement plan sponsor likes the idea of dealing with uncashed distribution checks, nor do they wish to draw unwanted regulatory attention or to become embroiled in costly litigation. Unfortunately, many plan sponsors place themselves in precisely that spot, becoming unnecessarily over-burdened with unresolved uncashed checks, while inviting unwanted regulatory scrutiny and/or legal challenges by having flawed uncashed check policies. In his 2/8/24 article in RCH's Consolidation Corner blog, Tom Hawkins lays out a "more-enlightened" approach to the problem of uncashed distribution checks, seeking to minimize their numbers, while simultaneously steering clear of the “red flags” that could land them in hot water.
Four Retirement Initiatives Vital to Closing the Racial Wealth Gap
Writing in the RCH Consolidation Corner blog, Tom Hawkins examines four retirement initiatives that could help in closing America's racial wealth gap. Leading off the article, Hawkins cites U.S. Treasury research identifying a significant racial wealth gap that has remained essentially unchanged over the past 20 years. In the retirement space, Hawkins identifies expanded access, auto portability, emergency savings and the Saver's Match as key initiatives that will make significant contributions to closing the gap, provided that retirement plan sponsors fully embrace and support them.
Auto Portability is Poised to Make an Even Bigger Impact in 2024
Writing in RCH's Consolidation Corner, RCH President & CEO Spencer Williams looks ahead to the New Year, when a key provision of the SECURE 2.0 Act—increasing the limit on small 401(k) accounts subject to automatic rollovers into safe-harbor IRAs from $5,000 to $7,000—goes into effect. While this development will cause more job-changing participants to be subject to automatic rollover provisions, the advent of auto portability could mean that these participants could ultimately fare much better, as auto portability's adoption accelerates. Williams references new results from RCH's Auto Portability Simulation (APS), which indicate that the new provisions -- when combined with auto portability -- could deliver even greater benefits in terms of reducing cashout leakage and preserving retirement savings, and offers plan sponsors with two New Year's resolutions to proactively respond to the changes.
Four Key Findings from the New Auto Portability Simulation
Writing in the RCH Consolidation Corner blog, RCH's Tom Hawkins summarizes the four key findings from the firm's Auto Portability Simulation, a discrete event simulation that models the impacts of auto portability over a 40-year period, and are detailed in a new white paper, Revisiting the Auto Portability Simulation: The Impact of the Portability Services Network, SECURE 2.0 and Expanded Access. Hawkins contends that the new APS analysis has improved the model’s predictive accuracy by incorporating new parameters that reflect “changing realities” driven by three major developments: 1) the advent of the Portability Services Network, 2) the passage of the SECURE 2.0 Act and 3) ongoing progress in expanding access to workplace retirement savings plans. The paper's four key findings highlight the growth of the participant population that will be subject to mandatory distributions, as well as auto portability’s effects on reducing cashout leakage, generating incremental retirement wealth, and delivering benefits to minorities and lower-income workers.
Auto Portability: It’s About the Participants
Writing in RCH's Consolidation Corner blog, Tom Hawkins reminds readers what auto portability is all about -- improving the retirement security of marginalized defined contribution participants. These participants -- comprised largely of minorities, women, younger and lower-income participants -- not only need auto portability the most, but there's solid evidence that they want it as well. To support his claim, Hawkins cites three highly-regarded surveys that have found a strong participant preference for auto portability and for consolidating small balances within the defined contribution system, and believes that recent developments will "augur well for Americans’ retirement security."
No One is Coming to Save You from Missing Participants
Writing in RCH's Consolidation Corner blog, Tom Hawkins provides his views on the dilemma facing plan sponsors who must confront the problem of locating missing plan participants. Despite ongoing efforts petitioning regulatory authorities for clear, bright line guidance, plan sponsors "must take decisive action to avoid being overwhelmed, including implementing effective, common-sense search practices, and pairing those search practices with other actions that will minimize the incidence of missing participants over time." Hawkins also urges plan sponsors to consider embracing retirement savings portability, including auto portability, to assist separated participants in consolidating their retirement savings following a job change.
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