News

Auto-Portability, Step by Step

PLANSPONSOR's Ed McCarthy takes a deep dive, step-by-step examination of auto portability as delivered by the Portability Services Network (PSN), which accounts for 63% of the defined contribution market, and which McCarthy notes, is "picking up steam." For details, McCarthy turns to RCH's Spencer Williams and Neal Ringquist, who opine on the technical details, while Vanguard's Steve Holman, a PSN Board member, offers the recordkeeping view.
Also featured in PlanAdviser.

Auto-Portability Solutions Show Signs of Growth

The PLANSPONSOR writing team of Natalie Lin and Remy Samuels tackle a big development in the DC recordkeeping world, when on 7/6/23, Principal announced that it was joining with the Portability Services Network (PSN), an industry-led utility dedicated to the adoption of auto portability. The pair writes: "[t]he addition of Principal means the country’s five largest recordkeepers by assets are now part of the network, with Principal joining Fidelity Investments, Empower, Vanguard and Alight Solutions, according to the latest ranking by PLANSPONSOR."

Principal Becomes 6th Recordkeeper to Join Portability Services Network

401k Specialist Editor-in-Chief Brian Anderson covers the 7/6/23 announcement by Principal that it has joined the Portability Services Network -- a "consortium of retirement plan service providers focused on helping America’s under-served and under-saved workers improve their retirement outcomes by making it easier to transfer their workplace retirement accounts when changing employers." With the move, reports Anderson, "Principal becomes a board member and one of seven owning members of PSN, which utilizes the auto-portability solution created by Retirement Clearinghouse."

Fintech Friday: Auto-Portability Continues to Gain Traction

NAPA Net's John Sullivan notes that "the movement to auto-portability continued to grow" as Principal announced it had joined with 5 other large recordkeepers and Retirement Clearinghouse (RCH), becoming one of the seven owning members of the Portability Services Network (PSN), launched in October 2022. In his piece, Sullivan quotes Robert Johnson, RCH and PSN chairman, who lauds Principal's "leadership, action, and progress to increase financial access and inclusion [that] will help more people benefit from auto-portability – in particular people of color, lower-income workers, and women, who have higher than average cash-out rates.”

Principal Joins Portability Services Network

PlanAdviser's Natalie Lin breaks down the 7/6/23 announcement by Principal that it has joined the Portability Services Network (PSN), "a consortium of retirement plan service providers seeking to help workers with lower balances transfer their workplace retirement accounts when changing employers." Lin notes that "[t]he addition of Principal means the country’s five largest recordkeepers by assets are now part of the network."

PRESS RELEASE: Principal® joins industry consortium to support automatic portability of U.S. retirement accounts

(DES MOINES, Iowa) – Principal Financial Group® today announced it joined the Portability Services Network, LLC (PSN), a consortium of retirement plan service providers focused on helping America's under-served and under-saved workers improve their retirement outcomes by making it easier to transfer their workplace retirement accounts when changing employers. Principal® is a board member and one of seven owning members of PSN, which utilizes the auto portability solution created by Retirement Clearinghouse, LLC (RCH).

Read the entire press release here.

The 401(k) ‘House-Cleaning’ to Come

The increase in the automatic rollover threshold from $5,000 to $7,000, as provided for in section 304 of the SECURE 2.0 legislation, will become effective for mandatory distributions made after December 31, 2023. What will be the impact of these provisions, if fully embraced by plan sponsors? One thing is certain – on both a one-time and ongoing basis, far more terminated participants will be subject to the automatic rollover provisions of their former-employers’ plans. Writing in 401k Specialist, RCH's Tom Hawkins explores the impact of an increased threshold that, when paired with the advent of auto portability and the operational status of the Portability Services Network (PSN), could mean that small balance terminated participants will finally come out on top.

Alight Solutions Releases 2023 Universe Benchmarks Report

Alight Solutions, one of the nation's largest defined contribution recordkeepers and a founding owner member of the Portability Services Network (PSN), released their 2023 Universe Benchmarks report -- the latest in a long line of annual reports that illustrate how workers are saving and investing in defined contribution (DC) plans. The report notes that cashout leakage increased in 2022, where 45% of participants cashed out, compared to 39% in 2021, while adding that the highest leakage levels were observed "almost always [in] small balances." Under the heading of trending topics and considerations, Alight also suggests that plans "add auto-portability" as it can "easily help transfer balances into the plan for new hires."

Direct link to the full 2023 Universe Benchmarks Report