401(k) cash out leakage blog posts


Apr
15
2019

How Auto Portability Serves Participants’ Best Interests - Part 3: Auto Portability Could Lower Plan Expenses

In the 3rd installment of his five-part series on "How Auto Portability Serves Participants' Best Interests", RCH's Tom Hawkins examines how a program of auto portability can serve to lower plan expenses by 1) reducing small-balance accounts and 2) increasing plan assets. To illustrate these benefits, Hawkins uses the Auto Portability Simulation (APS) to model a hypothetical, 10,000 participant plan over 40 years, with and without auto portability.

Apr
08
2019

Cybersecurity is Augmented by Auto Portability

In his latest column in Consolidation Corner, RCH President & CEO Spencer Williams examines the positive effect that auto portability could have on minimizing the cybersecurity threat to America's retirement system. As Williams observes, the scope and scale of cyber-attacks are escalating, and the retirement system is mobilizing to increase protections. Fortunately, says Williams, the same solution designed to address the industry's proliferation of small, stranded accounts -- auto portability -- can augment cybersecurity efforts through consolidation processes that utilize best security practices, leaving participants and their savings more secure.

Mar
27
2019

Tax Day is Coming—Encourage Millennial Participants to Incubate Saver’s Credits

With Tax Day (April 15) just around the corner, RCH's Spencer Williams advises plans and their participants to take advantage of the Saver's Credit, a tax credit that rewards eligible IRA and plan contributions. Nurturing these contributions not only promotes savings, says Williams, but also makes participants less-likely to cash out their 401(k) balances as they change jobs. Turning to Millennials, Williams addresses the Financial Independence, Retire Early (FIRE) movement, cites the latest research from EBRI indicating that Millennials' retirement prospects are significantly improved by auto portability, and provides several illustrations to make the point.

Mar
11
2019

How Auto Portability Serves Participants’ Best Interests - Part 2: An Enhanced Standard of Participant Care

In the second installment of his five-part series "How Auto Portability Serves Participants' Best Interests", RCH's Tom Hawkins examines how auto portability, by extending and enhancing elements of automatic rollovers, establishes a new standard of participant care. Auto portability, writes Hawkins, protects participants by: 1) minimizing time spent in a safe harbor IRA, 2) eliminating the need to cash out balances less than $1,000, 3) enhancing participant communication, 4) formally integrating a robust address location search and 5) establishing a transparent, simple & straightforward fee structure.

Feb
22
2019

How Auto Portability Serves Participants’ Best Interests - Part 1: Dramatically Improved Participant Outcomes

Plan sponsors considering the adoption of auto portability must determine that, by participating in the auto portability program, they are acting prudently and solely in the interests of their plan’s participants and beneficiaries. In this series, RCH's Tom Hawkins identifies five key reasons why an auto portability program serves the best interests of plan participants. Part 1 of the series examines the dramatically improved participant outcomes that will result from a program of auto portability.

Jan
29
2019

Want to Help Minority Participants Save More for Retirement? Adopt Auto Portability

In his latest article in Consolidation Corner, RCH President & CEO Spencer Williams acknowledges the

headwinds facing minorities in saving more for their retirement, including significantly higher rates of job turnover and cash-out leakage. Building on statements by RCH Chairman Robert L. Johnson at a December 2018 White House event, Williams makes the case that – for minority savers – auto portability could preserve up to $1.4 trillion in retirement savings, over a generation. Williams concludes that auto portability represents the “best, and easiest, way for sponsors and their service providers” to address the problem.

Jan
22
2019

Sidecar Accounts Can Plug Some 401(k) Leakage—But Not Most Leakage

In his latest article in Consolidation Corner, RCH President & CEO Spencer Williams examines the impact of "sidecar" accounts, which he views as a positive trend and a feature that could serve as a useful tool in the struggle to curtail leakage of savings from defined contribution plans. Williams also contends auto portability will be essential to plugging the biggest hole in the retirement system’s "bucket" -- cashout leakage -- which represents 89% of the overall leakage problem.

Dec
20
2018

2018: A Great Year for Retirement Clearinghouse

As we pause at the end of 2018 to count our blessing and to celebrate the Holidays, we at Retirement Clearinghouse (RCH) find ourselves grateful for a very successful year.

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