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The Fundamentals of Locating Missing Participants

RCH Solves The Small Account Problem For Plan Sponsors

The proliferation of small balance retirement savings accounts has long plagued plan sponsors, increasing their costs, fiduciary risks and placing their participants’ retirement security at risk.

Now, with the advent of auto portability, plan sponsors no longer have to compromise. Auto portability is the routine, standardized and automated movement of an inactive participant’s retirement account from a former employer’s retirement plan to their active account in a new employer’s plan, and was conceived and developed by RCH to serve the needs of terminated participants subject to their plan’s automatic rollover provisions. Plan sponsors who adopt auto portability will ensure that their small account problem is minimized, that their automatic rollover IRA program is fiduciary-friendly, and will dramatically improve their participants’ retirement outcomes.

Small AccountsThe Problem of Small Accounts

For plan sponsors, the small accounts left behind by terminated participants pose administrative headaches that, if left unchecked, can lead to serious problems.

As the illustration shows, small account problems work like an interlocking puzzle to drive:

  • Plan administration issues, including:
    • Increased plan expense
    • Lost or missing participants
    • Uncashed checks
    • Increased risk of plan audits
  • Financial wellness issues for plan participants, including:
    • Higher levels of cash out leakage
    • Lost earnings and excess fees
Some plan sponsors attempt to address the small account problem with traditional solutions, but these tactics don’t target the root causes of the problem and only create an endless cycle of problems.

For example, many sponsors attempt to lower their plan expenses by rolling the small accounts of terminated participants with under $7,000 into traditional safe harbor IRAs, while automatically cashing out accounts with less than $1,000. While these tactics offer temporary relief, they also foster longer-term problems, since a traditional automatic rollover process typically drives cash out leakage levels as high as 60%, and many participants who are automatically cashed out may not actually cash their checks, creating yet another administrative nightmare.

RCH Portability Services That Address the Small Account Problem

Fortunately for plan sponsors, Retirement Clearinghouse offers solutions that minimize the small account problem, by addressing its root causes.

RCH Automatic Rollover Service - More than a traditional automatic rollover, the RCH Automatic Rollover Service is the enhanced standard of care for an automatic rollover program, reducing cashouts by 52%, while helping participants receiving mandatory distributions (<$7,000) consolidate their retirement savings into their current-employer's plan. The RCH Automatic Rollover Service is also the first & only automatic rollover program to incorporate the auto portability feature. Learn more about auto portability by clicking here.

RCH Managed Portability is for all active participants, all balances and relies upon participant consent to consolidate retirement savings. Our Assisted Roll-In service provides participants with expert, end-to-end assistance in consolidating their retirement savings into their current-employer's plan.

RCH also delivers the following services:

Call 1-866-827-9608 to speak with an RCH Sales Representative, or e-mail us.

Individual RCH accountholders -- to manage your RCH account, visit the Manage Your RCH IRA Account page.

The Fundamentals of Locating Missing Participants

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