Consolidation Corner

The Explosion of Small-Balance IRAs

In his latest post in RCH's Consolidation Corner, RCH's Tom Hawkins examines EBRI's 10/1/20 Fast Facts - Losing Ground Safely: Small IRAs’ Large Stake in Money - which offers new insight into the magnitude of a small-balance IRA “explosion” being fueled by automatic rollovers, as well as the sub-optimal retirement outcomes they produce. EBRI's new information provides yet another data point in favor of 401(k) consolidation via auto portability and could serve to inform future regulatory guidance by expanding auto portability’s mandate to consolidate these previously “stranded” safe harbor IRAs back into our 401(k) system.

401(k) Cashout Leakage: A Reality, Not a “Narrative”

In his latest article in Consolidation Corner, RCH's Tom Hawkins provides his take on the topic of 401(k) cashout leakage, examining a recent study by the Investment Company Institute (ICI). Hawkins writes that the ICI study -- while using an innovative approach to mine 2010 tax data -- fell short in providing accurate or timely estimates of 401(k) cashout leakage levels, which are best-reflected in research conducted by EBRI, by large recordkeepers and summarized by the Savings Preservation Working Group.

New Research Confirms Clear Shift Towards Plan-to-Plan Portability

The Surprising Migratory Patterns of Job-Changing Participants

In his latest Consolidation Corner article, RCH President & CEO Spencer Williams utilizes EBRI data to examine the migratory patterns of job-changing participants. Looking specifically at the size of their former employers' plans (expressed in terms of numbers of participants) compared to the size of their most-recent active plan, Williams finds that the vast majority (82.98%) of these participants go to an employer with a plan equal in size, or larger than, their former employer’s plan. Only 17.02% of participants go to employers with smaller plans, and a mere 1.9% leave employers with large plans to go to an employer with a small plan (less than 100 participants). This data, says Williams, should significantly allay industry concerns that the adoption of auto portability for small balances could result in harmful participant outcomes.

The Magnitude of the 401(k) Cashout Leakage Problem

In his five-part series in Consolidation Corner, RCH's Tom Hawkins sheds light on the problem of cashout leakage, a silent crisis that unnecessarily robs millions of Americans of their retirement security. In his third article in the series, Hawkins examines the magnitude of the 401(k) cashout leakage problem, sharing new statistics recently supplied by EBRI, and offering some interesting comparisons so the reader can fully-grasp the enormity of the problem.

The Demographics of 401(k) Cashout Leakage

In his five-part series in Consolidation Corner, RCH's Tom Hawkins sheds light on the problem of cashout leakage, a silent crisis that unnecessarily robs millions of Americans of their retirement security. In his second article in the series, Hawkins examines the demographics of 401(k) cashout leakage, identifying those segments of the population most impacted by the problem, as well as those who stand to benefit the most from a solution.

LIMRA Webinar Features Michael Kreps’ Update on Auto Portability

EBRI Webinar Examines Impact of Tenure on Retirement Savings

RCH's Tom Hawkins summarizes the April 10th EBRI webinar Trends in Employee Tenure, which offered EBRI’s latest research examining broad employee tenure trends, and the impact that shorter tenure has on retirement savings. The webinar’s presenters included Craig Copeland, EBRI and Spencer Williams, Retirement Clearinghouse (RCH), and was moderated by Stacy Schaus, Schaus Group LLC. In his portion of the presentation, Williams introduced the concept of “synthetic tenure” – whereby enhancing system-wide portability -- particularly for small accounts -- enables participants to preserve their savings through job changes, mirroring the success of EBRI’s longer-tenured, “consistent participation” population.