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Retirement Clearinghouse in the News
Find news articles referencing RCH and our services, including RCH Auto Portability
Writing in Employee Benefit News, RCH President & CEO Spencer Williams examines the current state of financial wellness programs, and the challenges plan sponsors face in quantifying their benefits. Facilitating retirement savings portability -- by adopting auto portability for small balances or implementing an assisted roll-in program for larger balances -- can easily overcome this challenge by offering sponsors financial wellness initiatives that not only deliver excellent results, but can be readily measured.
CNBC personal finance reporter Greg Iacurci takes a look at the millions of Americans changing jobs each year, and concludes that consolidation of retirement savings -- particularly to a new workplace savings account -- is their best move. Stranded accounts, writes Iacurci, can cause a variety of problems, including forgotten savings, cash outs, sub-optimal investment choices and a difficult transition to retirement income. Iacurci quotes RCH President & CEO Spencer Williams, who states that “from a consumer perspective, the default should be 100% of the time to move your money [when changing jobs].”
Writing in Employee Benefit News, 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."
Forbes contributor Rick Unser, a 401(k) plan consultant and host of the 401(k) Fridays podcast, looks to the future and predicts four key 401(k) automation features he believes will deliver significant benefits for participants. Citing job-changing as "one of the single most significant threats to a secure retirement" -- Unser identifies auto portability as an "emerging solution (that) will help with...the challenge" and "will move your retirement savings from your retirement plan at your old company to the retirement plan at your new one."
On 12/06/19, RCH Founder, President and CEO Spencer Williams recorded a podcast with Rick Unser of 401(k) Fridays. The hour-long discussion covered the long term impact of automatic enrollment, and the emerging auto concept of Auto Portability. Williams details what Auto Portability is, the retirement challenges it intends to solve, how it differs from today’s auto-cashouts or auto-rollovers and shares how employers or retirement service partners can get involved.
ASPPA Net reporter Ted Godbout examines new EBRI research that finds job-changing 401(k) participants' carefully-crafted asset allocation strategies can become dramatically inconsistent after rolling over balances to IRAs. This issue, the research says, "was particularly acute for small-balance rollovers of less than $5,000, as a large percentage of these assets ended up in MMFs as a default investment in the IRAs." EBRI noted that "facilitating the movement of the IRA assets of those still working back into 401(k) plans, such as through auto portability measures...could help achieve the longer-term asset allocation strategies...developed in 401(k) plans, particularly for accounts with lower balances."
PLANSPONSOR's Lee Barney reports on the Savings Preservation Working Group's recent analysis (link) of the problem of 401(k) cashout leakage, estimated to be between $60 billion and $105 billion per year, and affecting 33% to 47% of job-changing participants. The report -- the most-comprehensive analysis of cashout leakage to date -- represents a meta-analysis of studies conducted by EBRI, large recordkeepers, the Government Accountability Office (GAO), Boston Research Technologies and RCH's own Auto Portability Simulation. The SPWG's conclusions were reviewed and validated by a team of industry experts, trade associations and advocacy groups, and specifically acknowledges the contributions of RCH's Spencer Williams, Tom Johnson and Tom Hawkins.
PLANSPONSOR reporter Lee Barney joins the chorus of media coverage of the EBRI Issue Brief examining 2 policy initiatives -- a nationwide expansion of an OregonSaves-like program, as well as the adoption of 401(k) safe harbor plans. While the EBRI analysis found that both initiatives delivered significant benefits in the form of reductions to the nation's retirement deficit, the addition of auto portability delivered even more-dramatic benefits to both by reducing the amount of cashout leakage experienced by job-changing participants.