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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.
In his latest article in Consolidation Corner, RCH EVP Spencer Pringle offers job-changing 401(k) participants important tips on how to avoid becoming a 401(k) DIY “horror story.” Pringle examines three DIY scenarios for participants to avoid, including cashing out, stranding a 401(k) balance at a previous employer and finally, attempting a DIY roll-in.
RCH's Tom Hawkins reveals new research that predicts 401(k) participant outcomes following
separation for two balance segments – those above & below $15,000. Using logic developed in the Auto Portability Simulation to track & tally
participant outcomes 8 years following separation, the results reveal a startling contrast between
the two segments – with participants in the over-$15,000
segment experiencing far-superior outcomes to those in the under-$15,000
segment. To address the disparities, Hawkins advocates for a new “automatic” in the form of auto portability.
In November, we will celebrate an important milestone in the history of the 401(k)—the 40th anniversary of the enactment of the Revenue Act of 1978, which added Section 401(k) to the Internal Revenue Code. Section 401(k) allowed employees to defer compensation without being taxed, and gradually popularized the concept of the employer-sponsored defined contribution plan.
It may surprise many to learn that there’s another problem that’s orders-of-magnitude worse, which silently devastates millions of Americans’ prospects for a timely or comfortable retirement every year. I’m referring to 401(k) cashouts, and it’s time we took serious action to address them head-on.
The most important portability development on the horizon is the DOL’s auto portability Advisory Opinion, which will provide guidance for plan sponsors on the automatic roll-in of small account balances previously forced-out into safe harbor IRAs.
Auto portability has become a leading retirement savings public policy initiative due to its proven ability to preserve small-balance defined contribution accounts. Now, research is indicating that, when it comes to women, auto portability could deliver even greater benefits by making it easier for women participants to preserve their 401(k) savings and help to put them on par with men to achieve financial wellness.
The video integrates new research findings from the March 2018 study “The Mobile Workforce’s Missing Participant Problem” and provides viewers with the most-complete and factual summary of the problem.
To readers aware of the ongoing, intense media focus on cyberattacks, it should come as no surprise that multiple studies show that the frequency and sophistication of cyberattacks is increasing, rising dramatically in 2017.