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Auto Portability blog posts
The Risky Business of Cashing Out Plan Balances Below $1,000
Writing in the RCH Consolidation Corner blog, Tom Hawkins examines the “risky business” of automatically cashing out sub-$1,000 balances of separated participants. Hawkins writes that the practice, “may seem like an expedient approach to rid a plan of small balances” but “carries undesirable side effects for both the plan and for its participants” including uncashed distribution checks and unnecessary cashout leakage. The best approach, continues Hawkins, is to “adopt auto portability, which delivers all of the benefits but none of the flaws of old-school automatic rollovers.”
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."
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.
Robert L. Johnson Gives Keynote Address at 2024 EBRI Spring Policy Forum
On May 16th, Robert L. (Bob) Johnson, Chairman of The RLJ Companies, Retirement Clearinghouse (RCH) and the Portability Services Network (PSN), delivered the keynote address to the 2024 EBRI Spring Policy Forum, co-hosted by the American Benefits Council. In Johnson’s address, entitled “Helping to narrow the nation’s lingering racial wealth gap” – the legendary Black American entrepreneur gave Forum attendees insight into the businessman’s long, purpose-driven journey to create entrepreneurial solutions to social problems, including his current efforts in the retirement sector, where he’s become laser-focused on leveraging public/private sector solutions that narrow the wealth gap for minorities and women.
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.
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