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Auto Portability in the News
Browse the most comprehensive collection of articles in the media that feature auto portability.
In his 10/28/19 article in Pensions & Investments, reporter Brian Croce examines the "critical turn toward acceptance" that the Retirement Clearinghouse (RCH) auto portability program has made, following the "green light" the program received from the U.S. Department of Labor. In the piece, Groom Law Group's Michael Kreps characterizes the DOL's actions as the "starting gun", while RCH's Spencer Williams and Neal Ringquist provide important updates on progress-to-date with 401(k) recordkeepers. Tim Rouse, executive director of SPARK, an industry group representing recordkeepers, voices his support for auto portability, while ERIC's Aliya Robinson states that "once [auto portability] hits critical mass I think it's something we'll see pretty widely across the retirement system."
Writing in RCH's Consolidation Corner blog, RCH President & CEO Spencer Williams observes that safe-harbor IRAs -- created by the EGTRRA-mandated automatic rollover process -- were never intended to be "permanent retirement savings vehicles." Too often, argues Williams, the relief plan sponsors realize from automatic rollovers comes at the expense of participant outcomes -- who experience high levels of cashouts, low investment returns and savings-depleting fees. With the advent of auto portability, participants will spend less time in a safe harbor IRA, and "plan sponsors no longer have to consider trading participant outcomes for administrative convenience."
On 10/11/19, NAPA Net released results of a reader survey addressing the problem of cashout leakage and yielding valuable perspectives on retirement savings portability. Regarding plan-to-plan portability, a theme “echoed repeatedly” was the “complex, manual process that requires significant form completion and coordination.” The poll further found that 82% of respondents had plan sponsor clients who would be interested in a program that automatically consolidated balances. Specifically referencing auto portability, 81% of respondents indicated that they would introduce such a program to a plan, with 75% opining that such a program would make it easier for participants to manage their retirement savings.
In an article appearing in legal intelligence site JDSupra.com, Ballard Spahr LLP's Edward Wegerson examines the impact of the DOL's recent actions towards the RCH Auto Portability program. Wegerson provides some historical background by noting prior, related regulatory initiatives over the last several years, and concludes by stating that "for many employers and participants in high turnover industries, [auto portability] will serve to preserve retirement accounts that will provide more participants with a more secure retirement with minimal effort."
In the fifth installment of his five-part series on 401(k) cashout leakage in 401k Specialist, RCH's Tom Hawkins addresses auto portability, a solution that not only makes sound business sense, but delivers a positive societal impact for the corporations adopting it. Citing the recent "Statement on the Purpose of a Corporation" from members of the Business Roundtable, Hawkins believes that as these socially-conscious corporations examine auto portability, they’ll quickly become convinced that auto portability is both a sound business decision, as well as the right thing to do.
In the fifth installment of his five-part series on 401(k) cashout leakage, RCH's Tom Hawkins addresses auto portability, a solution that not only makes sound business sense, but delivers a positive societal impact for the corporations adopting it. Citing the recent Statement of Purpose from members of the Business Roundtable, Hawkins believes that as these socially-conscious corporations examine auto portability, they’ll quickly become convinced that auto portability is both a sound business decision, as well as the right thing to do.
ThinkAdvisor's Michael S. Fischer examines the latest Employee Benefit Research Institute (EBRI) research on auto portability, and finds a lot to like. First addressing the magnitude of the 401(k) cashout leakage problem, Fischer notes EBRI's finding that $92.4 billion leaked in 2015, and that each year, 4 in 10 plan participants who leave their jobs will cash out 15% of plan assets. Fischer goes on to highlight auto portability's effectiveness in plugging cashout leakage, accounting for $1.5 trillion in benefits as a standalone policy initiative. Fischer further cites auto portability's benefits to specific demographic segments, and concludes by noting its incremental, beneficial effects when combined with other legislative initiatives that expand access to workplace retirement plans.
In his latest byline in Employee Benefit News, RCH President & CEO Spencer Williams takes on cash-out leakage -- which remains a big problem for the U.S. retirement system. Citing research that examines auto portability in tandem with various legislative proposals to help Americans save more for retirement, Williams makes the case that, with auto portability, millions of participants will no longer find cashing out to be the easiest option when they switch jobs, and will preserve their retirement savings instead.