- Press Releases
- Thought Leadership
- Consolidation Corner
- 401k Consolidation
- Auto Enrollment
- Auto Portability
- Automatic Rollovers
- Cashout Leakage
- DEI, ESG & Social Responsibility
- ERISA Advisory Council
- Lifetime Plan Participation
- Managed Portability
- Missing Participants
- Mandatory Distributions
- Mobile Workforce
- Plan Termination
- Public Policy
- Retirement Income
- Retirement Plan Portability
- Retirement Research
- Safe Harbor IRA
- Uncashed Checks
401(k) cash out leakage blog posts
RCH’s newly-appointed EVP of Public Policy, Renée Wilder Guerin finds a lot to like in the 7/28/21 Senate Finance Committee hearing, where lawmakers heard testimony on how to increase retirement savings, including tackling the longstanding problems of cashout leakage, missing participants and “forgotten” retirement savings accounts. Wilder Guerin notes that auto portability was favorably mentioned twice by Aliya Robinson (SVP, Retirement & Compensation Policy for ERIC), as a policy initiative her organization – comprised of the nation’s largest plan sponsors – supports. Coming on the heels of EBRI’s 21st Annual Retirement Confidence Survey, where nearly 9 in 10 participants indicated their preference for the feature, Senate Finance Committee testimony “bodes extremely well for auto portability’s widespread adoption, as well as the enactment of public policies that further enhance it.”
Don’t Relegate Lost & Missing Accounts to the Lost & Found—Consolidate Them in the Retirement System
RCH’s President & CEO Spencer Williams, writing in the Consolidation Corner Blog, opines on draft provisions in SECURE 2.0 legislation that call for establishment of a “lost & found” – including housing sub-$1,000 balances for all terminating 401(k) participants. As proposed, Williams observes that simply moving sub-$1,000 balances to the PBGC does little to reduce cashouts or stranded savings and offers auto portability as a “far more constructive method” to reduce cashouts and to promote consolidation of retirement savings.
Writing in RCH's Consolidation Corner, Tom Hawkins compares & contrasts the issue of ‘forgotten’ 401(k) accounts to its more problematic relative, 401(k) cashout leakage. In the piece, Hawkins takes the position that recent attention given forgotten accounts – via draft SECURE 2.0 legislation and the release of a drama-laden white paper – have created the mistaken impression that there’s a massive problem with forgotten 401(k) accounts, when in fact ‘forgotten’ 401(k) accounts are dwarfed by 401(k) cashout leakage, in terms of both their size and severity.
Writing in RCH's Consolidation Corner, RCH EVP Tom Johnson reports on the U.S. Senate’s Committee on Health, Education, Labor and Pensions (HELP) 5/13/21 hearing on retirement security. With testimony from a blue-ribbon panel of witnesses, the hearing had a broad focus, but the topic of retirement savings leakage, and its most-promising solution, auto portability, were prominently featured in testimony by EBRI CEO Lori Lucas, and echoed by other witnesses and Committee members.
RCH’s Tom Hawkins examines a retirement savings leakage study from the Joint Committee on Taxation, a nonpartisan committee of the United States Congress. Released with little fanfare on 4/26/21, the study confirms the findings of earlier research on cashout leakage – namely, that cashout leakage is a big problem, is driven by job changing, and is exacerbated by "forced distributions and [a lack of] portability of plans.”
Auto Portability is an Easily Quantifiable Solution for Helping Participants Achieve Financial Wellness
In his latest article in RCH’s Consolidation Corner, CEO Spencer Williams addresses the conundrum facing employers, who are committed to promoting their employees’ financial wellness, but also face the grim reality of excessive retirement savings leakage, exacerbated by the COVID-19 pandemic. By adopting auto portability, Williams contends that plan sponsors can “easily quantify their financial wellness efforts” while getting out in front of cashout leakage.
America’s 401(k) system, long plagued by friction, produces $92.4 billion of excessive cash-out leakage annually. In recent years and culminating in 2021, the private sector has finally “cracked the code” and is delivering innovative fintech solutions, combined with education and personal assistance to reduce friction and to enable true 401(k) portability.
Following on to the 2013 study by Boston Research Group (now Boston Research Technologies), a new study released by Retirement Clearinghouse (RCH) revisits a mega plan sponsor’s ongoing experience with a program of 401(k) retirement savings portability, and finds that not only have the benefits of the original program persisted, they’ve grown, with plan participants continuing to realize significant, measurable benefits.