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Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
The Safe-Harbor IRA: Friend or Foe?
In his latest Consolidation Corner
blog post, RCH President & CEO Spencer Williams draws much-needed attention
to the downside of traditional safe harbor IRAs. While plans can benefit by
practices that remove small-balance accounts, Williams argues that this benefit
may be illusory, as former plan participants will likely cash out or become
“stuck” with multiple accounts that deplete their savings – both scenarios that
could expose sponsors to potential liability. Auto portability, says
Williams, can reverse this dysfunctional dynamic, achieving better outcomes for
plans and participants alike.
An Important Milestone: The DOL Issues Final Prohibited Transaction Exemption for Auto Portability
In his 7/31/19 article in Consolidation Corner, RCH Founder, President & CEO Spencer Williams addresses the latest action by the U.S. Department of Labor (DOL), issuing the final Prohibited Transaction Exemption (PTE) to Retirement Clearinghouse (RCH) for the RCH Auto Portability program, completing the regulatory framework and clearing the way for auto portability’s widespread adoption
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.
What’s Missing from the SECURE Act? A Provision to Plug Cash-Out Leakage
In his latest article in Consolidation Corner, RCH President & CEO Spencer Williams identifies a key, missing element in pending retirement legislation: provisions to plug cash-out leakage. Citing both the SECURE Act of 2019 and the Automatic Retirement Plan Act of 2017 (ARPA), Williams applauds their commendable goals to expand coverage, but takes them to task for failing to incorporate provisions that plug leakage. To make his case, Williams cites two recent EBRI studies, both finding that auto portability – when combined with legislative proposals that expand access – vastly improves their public policy benefits by stemming leakage and by dramatically reducing the nation’s retirement savings shortfall.
Spotlight on Cashout Leakage: The Fundamentals
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 first article, Hawkins addresses the fundamentals of cashout leakage -- defining it, clearing up common sources of confusion, and identifying why the problem continues to persist.
How Auto Portability Serves Participants’ Best Interests: Part 5
In the 5th installment of his five-part series on "How
Auto Portability Serves Participants' Best Interests", RCH's Tom Hawkins
examines how auto portability can mitigate retirement savings cybersecurity
risks. Auto portability, writes Hawkins, employs the simple-but-powerful
principle of consolidation to lower cyber-risk by 1) reducing the cyber-threat
attack surface, 2) minimizing fraud-prone, small-balance retirement savings
accounts and 3) securely moving retirement savings forward.
How Auto Portability Serves Participants’ Best Interests: Pt 4 Auto Portability Enhances Participants’ Financial Wellness
In the 4th 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 enhance 401(k) participants' financial wellness. To make his case, Hawkins identifies three ways auto portability promotes financial well-being, including: 1) preventing unnecessary 401(k) cashouts, 2) helping 401(k) participants clear the "$10,000 hurdle" and 3) simplifying retirement planning.
A Plan Metric Every Sponsor Should Track: Participant-Retained Retirement Savings
In his latest article in Consolidation Corner, RCH President & CEO Spencer Williams advises retirement plan sponsors to consider tracking the average percentage of retirement savings that participants retain during their tenure. Auto portability, says Williams, can enable participants to preserve their small-balance savings through job changes. Going further, Williams encourages plan sponsors and consultants to apply the all-important “participant-retained savings” lens when evaluating automatic rollover programs, including metrics such as cash-out rates, median safe harbor IRA account duration and provider support for consolidation.
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