Safe harbor IRA blog posts


Feb
08
2024

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.

Aug
31
2023

A Perfect Storm is Brewing—But Automated Portability Could Defuse It

RCH and PSN President & CEO Spencer Williams, writing in the Consolidation Corner blog, notes that a rising incidence of hardship withdrawals and 401(k) loans – as reported by Bank of America – combined with a pending increase in the account-balance limit for automatic rollovers effective 12/31/23, could create a “perfect storm” for depleting Americans’ retirement savings. “Fortunately,” writes Williams, “sponsors and recordkeepers have access to a solution that can help them clean up their plans without automatically rolling terminated accounts into safe-harbor IRAs.” Auto portability, continues Williams, is a “capability [that] is more essential than ever, with 401(k) plan enrollment continuing to increase” and could serve to defuse the brewing storm of potential cash-outs.

Aug
11
2023

The Future is Brighter for Small-Balance Retirement Accounts

RCH's Tom Hawkins, writing in the Consolidation Corner blog, describes the "brighter future" emerging for small-balance retirement savings accounts. Hawkins maintains that these accounts, which he associates with an increased incidence of sub-optimal participant outcomes, will fare much better in the future due to "large-scale, industry-led action on auto portability, and more recently, proactive steps being taken by leading providers to consolidate legacy small-balance IRAs."

Jun
16
2023

The 401(k) “House-Cleaning” to Come

The increase in the automatic rollover threshold from $5,000 to $7,000, as provided for in section 304 of the SECURE 2.0 legislation, will become effective for mandatory distributions made after December 31, 2023. What will be the impact of these provisions, if fully embraced by plan sponsors? One thing is certain – on both a one-time and ongoing basis, far more terminated participants will be subject to the automatic rollover provisions of their former-employers’ plans. Writing in the RCH Consolidation Corner blog, Tom Hawkins explores the impact of an increased threshold that, when paired with the advent of auto portability and the operational status of the Portability Services Network (PSN), could mean that small balance terminated participants will finally come out on top.

Dec
13
2022

Webinar Showcases Extraordinary Industry Alignment on Auto Portability

For defined contribution recordkeepers, competition has long been fierce, so it’s extraordinary when industry rivals join forces and align around a common cause. That alignment around auto portability, embodied in the newly launched Portability Services Network (PSN), was on full display in a 12/8/22 Groom Law Group webinar. The event featured representatives from retirement industry titans and founding PSN members Alight Solutions, Fidelity Investments and the Vanguard Group, joined by Retirement Clearinghouse (RCH).

Sep
15
2022

How Consultants Can Miss the Mark on 401(k) Automatic Rollovers

401(k) plan consultants have been forceful advocates for the adoption of best practices at leading retirement plan sponsors. However, when it comes to automatic rollover programs, plan consultants sometimes miss the mark, at least in terms of participant outcomes. RCH's Tom Hawkins, writing in the Consolidation Corner blog, makes the case that 401(k) plan consultants should extend their analysis to emphasize those automatic rollover program components that help participants improve their retirement outcomes by avoiding cashouts, moving their retirement savings forward, and keeping their stay in safe harbor IRAs as brief as possible.

May
23
2022

Re-Thinking the Automatic Rollover IRA

Selecting an automatic rollover IRA provider used to be easy. Most 401(k) plan sponsors simply accepted the solution offered through their recordkeeper or TPA. Others performed due diligence, using a limited set of criteria including basic fees, investment options and accountholder service. Few, however, considered the grim realities facing terminated participants forced out into safe harbor IRAs, including excessive cashouts, forgotten accounts, hidden fees, and barriers to exit. Now, it's incumbent upon plan sponsors to fundamentally “re-think” these programs, incorporating five new criteria to ensure that automatic rollover IRA programs are fiduciary-friendly, while dramatically improving participants’ retirement outcomes.

May
16
2022

401(k) Portability in Four Movements

RCH's Tom Hawkins examines the experience of a very large (250,000+ participants) 401(k) plan sponsor that has been highly successful in delivering improved participant outcomes by incrementally adopting a full program of retirement savings portability. Looking at four distinct five-year periods that coincided with increasing levels of portability and improved participant outcomes, Hawkins writes that "there’s no finer example of those [improved] outcomes than the multi-year, real-world experience of this plan sponsor, where thousands of participants increased their prospects for a timely and comfortable retirement."

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