Auto Portability in the News
Browse the most comprehensive collection of articles in the media that feature auto portability.
401(k) or ATM? WSJ Article Examines Cashouts, Features RCH Data
The Wall Street Journal's Anne Tergesen takes a look at the latest research on auto-enrolled participants in 401(k)-style plans, which finds that these workers tend to treat these savings "like automated-teller machines" -- a phenomenon known in the retirement industry as "leakage." To support her point, Tergesen uses data supplied by Retirement Clearinghouse (RCH), indicating that 60% of 401(k) participants with balances below $10,000 will cash out their savings, paying income taxes and a 10% penalty. Tergesen also notes that "policy experts recommend automating the process of transferring money from an old employer's plan to a new employer's plan" -- a process known as auto portability.
US sends ‘myRA’ accounts to Retirement Clearinghouse
On 8/9/18, the Editorial Staff of the Retirement Income Journal reported that the Treasury Department will transfer remaining, unmoved assets from the myRA program (discontinued in 2017) into Roth IRA accounts at Retirement Clearinghouse (RCH). The article references the notice posted on the myRA.gov website, which provides current myRA accountholders with instructions on how to withdraw or transfer their balances prior to the deadline of August 31, 2018, as well as providing information about going-forward arrangements for account balances that are moved to RCH. Also highlighted are RCH's ongoing efforts to obtain regulatory approval for auto portability, a clearing system that will "automatically transfer 401(k) assets....when a participant changes jobs."
The Next Big Advancement for the 401(k)
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.
ASSPA Net Reviews RCH Article on 401(k) Cashouts, Missing Participants
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."
RCH in WISER: Understanding & Solving the Problem of Women's 401(k) Cashout Leakage
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.
RCH in BenefitsPRO: 401(k) Truth Bomb: Missing Participants are Bad, 401(k) Cashouts are Worse
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.
401(k) Truth Bomb: Missing Participants are Bad, 401(k) Cashouts Are Worse
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 Recent Retirement Savings Portability Developments
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.
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