Auto Portability in the News
Browse the most comprehensive collection of articles in the media that feature 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.
On 8/8/18, ASSPA Net's John Iekel reviews the 7/26/18 article in BenefitsPRO by RCH's Tom Hawkins, which draws a comparison between 401(k) missing participants and cashouts. In making the argument that 401(k) cashouts could be "orders-of-magnitude worse" than missing participants, Iekel summarizes Hawkins' logic, including: 1) missing participants have preserved their savings, 2) participants cashing out are far more numerous than those going missing and 3) almost two-thirds of cashouts are unnecessary. Hawkins' answer to address both problems, says Iekel, is the "introduction of auto-portability."
The Women's Institute for a Secure Retirement (WISER) features a guest article by RCH's Tom Hawkins, showcasing research presented at a 5/22/18 WISER forum, indicating that women with small 401(k) balances cash out more frequently than their male counterparts. As women’s 401(k) balances grow, they become more likely than men to preserve their retirement savings. These behaviors, along with the results of the Auto Portability Simulation, suggest that a program of retirement savings portability could incubate women’s small 401(k) balances, allowing them to more effectively grow their savings to higher balance levels, where more beneficial behaviors can prevail.
In his 7/26/18 article in BenefitsPRO, RCH's Tom Hawkins addresses the dual problems of missing participants and 401(k) cashouts, which both share common causes – a mobile American workforce and a lack of retirement savings portability. While missing participants are bad and have been receiving a great deal of attention, the issue of 401(k) cashouts is actually much worse, as annual cashouts outpace new missing participant accounts by a factor of almost 25-to-1. Fortunately, retirement savings portability, in the form of auto portability, delivers a “two-fer” by providing a strategic solution to both.
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.
401k Specialist features a July 2018 article by RCH's Tom Hawkins, addressing recent public policy activities on the issue of retirement savings portability. In his article, Hawkins examines three developments, all taking place in late June, and looks ahead to the anticipated delivery of an Advisory Opinion by the Department of Labor on auto portability.
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. RCH CEO Spencer Williams summarizes new research 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, helping put them on par with men to achieve financial wellness.