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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.
Four Reasons Why Auto Portability Can't Wait
Writing in RCH's Consolidation Corner blog, Tom Hawkins makes the case that auto portability can wait no longer and cites four key reasons that the new "automatic" feature should be adopted. Hawkins' key reasons include: 1) cashout leakage isn't waiting, 2) the "Great Resignation" is accelerating, 3) policy initiatives that expand access to workplace retirement plans require auto portability to realize their intended benefits, and 4) auto portability is here, now and working.
Solving Cashout Leakage, Auto Portability Featured in Senate Committee Hearing
RCH Executive Vice President of Public Policy Renee Wilder Guerin examines the 10/28/21 hearing held by the Senate Special Committee on Aging -- A Financially Secure Future: Building a Stronger Retirement System for All Americans -- and found it to be highly-focused on the problems of cashout leakage, as well as its most promising solution, auto portability. Re-capping key testimony and Q&A from the hearing (including excerpted video), Wilder Guerin concludes that lawmakers are more focused than ever on solving retirement savings problems for under-served and under-saved demographic segments.
The Top Five Misconceptions About Auto Portability
Auto portability is a new “automatic” plan feature that is rapidly gaining acceptance by large defined contribution recordkeepers serving almost 10 million participants. While the feature is relatively new, it has received a great deal of attention in the media and has also been the beneficiary of definitive regulatory guidance, promulgated by the Department of Labor (DOL). Despite this, significant misconceptions persist about auto portability. The top five misconceptions are presented here, which includes a link to a short video.
Vanguard Joins the Auto Portability Clearinghouse
Writing in RCH's Consolidation Corner blog, Executive Vice President Neal Ringquist addresses the 9/21/21 press release by Vanguard that it will engage with RCH to introduce the RCH Auto Portability program to their defined contribution plan sponsor clients in mid-2022. Ringquist supplies readers with important perspective, stating: "Vanguard’s announcement is a major milestone in RCH’s ongoing efforts to deliver seamless, plan-to-plan portability to America’s defined contribution system. RCH Auto Portability has now been embraced by two of America’s top ten defined contribution recordkeepers, collectively serving almost 10 million employees."
EBRI Research Reveals Auto Portability’s Massive Incremental Benefits to Pending Legislation
In a 9/13/21 Employee Benefit Research Institute (EBRI) webinar (The Impact of Proposed Legislative Changes on Retirement Income Adequacy), EBRI Research Director Jack VanDerhei presented an analysis of pending legislative changes, including automatic contribution plans and arrangements (ACPAs), paired with a refundable saver’s credit. Unsurprisingly, the benefits for these policy initiatives were quite large. However, what was truly surprising was the sheer magnitude of incremental benefits delivered by the addition of auto portability, significantly paring retirement shortfalls for 35–39-year-olds, across all race and ethnicity categories.
It’s The Final Countdown for 2021 401(k) Plan Terminations
As we enter the 4th quarter of 2021, many plan sponsors – for a variety of reasons – are faced with the prospect of a 401(k) plan termination. For most, this will be the first and only time they’ll undertake this important project. In this article in RCH's Consolidation Corner blog, readers are provided access to a three-part video series featuring RCH's Mike Wilder, who instructs viewers on the essential aspects of terminating a 401(k) plan.
Beware of Second Order Effects for Retirement Savings Public Policies
RCH's Tom Hawkins examines “second order effects” that can occur with retirement savings public policies currently that would dramatically expand access to, and participation in, defined contribution plans. While the benefits are impressive, additional undesired consequences can arise that are antithetical to the policies’ original intent, including increased cashout leakage, missing participants, uncashed checks and forgotten/stranded accounts. Understanding these highly predictable second order effects, Hawkins identifies plan-to-plan portability as a means of addressing them, while significantly boosting the overall policies’ benefits.
Refundable Saver’s Tax Credits Would Significantly Reduce Retirement Savings Shortfall—Especially for Minorities
Writing in RCH's Consolidation Corner, RCH President & CEO Spencer Williams examines pending retirement savings legislation, and focuses upon the benefits of a refundable saver's credit, which would be directly deposited into taxpayers' 401(k) and IRA accounts. Taking his analysis a step further, Williams considers the infrastructure required to transfer these funds to savers, and identifies considerable synergies with the existing technology that supports auto portability.