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Why Preserving Small Balances Matters (and How Auto Portability Helps)
The preservation of small-balance 401(k) accounts – particularly those under $7,000 and subject to 401(k) plans’ automatic rollover provisions – represents an important challenge for America’s retirement system. In his 6/26/25 article in RCH's Consolidation Corner blog, Tom Hawkins examines four compelling arguments for the importance of preserving small balances, while demonstrating how auto portability, as delivered by the Portability Services Network (PSN), can help achieve this goal.
Come On In, The Water’s Fine
RCH’s Tom Hawkins, writing in the Consolidation Corner blog, shares his perspective on a recent public position taken by PensionBee, who drew attention to the “participant-unfriendly nature of some safe harbor IRAs” and suggested that “plan sponsors may risk breaching their fiduciary duty to plan participants by utilizing them.” Hawkins generally agrees but notes that the firm “didn’t go far enough” and offers readers with three areas of additional concerns that support this view. The piece concludes by offering plan sponsors with tips and resources to avail themselves of, should they wish to “take a hard look at their automatic rollover programs.”
Beyond Missing: Targeting Unresponsive Participants in Retirement Plans
Writing in the RCH Consolidation Corner blog, Tom Hawkins examines the phenomenon of ‘unresponsive’ participants, which he defines as participants “for whom a plan has correct contact information, but who fail to respond to plan communications.” This sub-set of missing participants presents plan sponsors with unique challenges, because “the challenge is not finding them – it’s engaging them.” Hawkins continues by identifying six major drivers of unresponsive participants, while offering plan sponsors six best practices to minimize them.
On Earth Day, Consider Auto Portability to ‘Recycle’ 401(k) Savings
On April 22nd, we celebrate the 55th annual Earth Day, and
that gives RCH’s Tom Hawkins the opportunity to consider how the concept of
recycling applies to our nation’s 401(k) system, which Hawkins characterizes as
having a “waste problem” that manifests in the form of excessive cashout
leakage and stranded accounts. By contrast, auto portability represents a
sustainable solution that ‘recycles’ small-balance accounts, and its adoption
is rapidly accelerating following the operational status of the Portability
Services Network (PSN).
Three Steps to Getting Off the Uncashed Distribution Check Treadmill
If you’re a defined contribution plan sponsor struggling with uncashed distribution checks, it can feel you’re on a never-ending treadmill. However, there are effective strategies that can greatly reduce the time, cost and risks associated with uncashed checks. Writing in the RCH Consolidation Corner blog, Tom Hawkins outlines three key steps to getting off the treadmill, including 1) a proactive program of locating missing participants, 2) eliminating the automatic cashout of sub-$1,000 balances and 2) utilizing safe harbor IRAs to resolve stale-dated checks.
Here’s to the Future “Graduates” of Auto Portability
While auto portability’s immediate impact in reducing cashouts is well-documented, new insights reveal another powerful long-term effect: systematic balance consolidation that helps small-balance job-changing participants cross the vital $10,000 savings hurdle, where retirement security becomes self-reinforcing. Writing the RCH’s Consolidation Corner blog, Tom Hawkins characterizes this effect as “graduating” from auto portability and uses Auto Portability Simulation (APS) data to follow a hypothetical “class” of 100 small-balance job-changers through their first three jobs – where 36% compile a perfect record of savings preservation and balance consolidation.
The Saver's Match and Auto Portability: A Powerful Combination
Two groundbreaking retirement savings initiatives could be poised to converge, potentially revolutionizing the way Americans save for retirement. The Saver's Match program, set to debut with the 2027 tax year, and auto portability, powered by the Portability Services Network (PSN), present a unique opportunity to address long-standing challenges in the retirement system. By leveraging the strengths of both programs, we can create a more robust and efficient retirement savings ecosystem that benefits millions of American workers.
The Accelerating Adoption of Auto Portability: A Market Adoption Theory Perspective
RCH’s Tom Hawkins, writing in the Consolidation Corner blog, examines the accelerating adoption of auto portability from the perspective of the tried-and-true theory of market adoption. Hawkins takes the position that auto portability is “on the cusp of becoming a mainstream feature in retirement plans” as it transits the innovator/early adopter phase and moves into the early majority phase, as described in the theory’s framework.
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