News

Vanguard to Add Auto-Rollover Service for 401(k) Accounts

Ginger Szala, executive managing editor of Investment Advisor magazine, updates her readership on the 9/21/21 announcement by Vanguard, which Szala notes "has joined forces with Retirement Clearinghouse to provide an auto-portability service that allows 401(k) participants to have their defined contribution plans automatically roll over when changing jobs."

Vanguard rolling out auto portability for 401(k) clients

Pensions & Investments Washington correspondent Brian Croce reports on Vanguard's 9/21/21 announcement that it will introduce RCH's auto portability service for its 401(k) plan sponsor clients and their participants, to launch in mid-2022. Croce notes that RCH's auto portability program "was first piloted in 2017 and in 2019, the Department of Labor granted RCH the ability to expand the program, which is aimed at reducing plan leakage and missing participants."

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401k Auto-Portability Takes ‘Giant Leap Forward’ with Vanguard, RCH Deal

401k Specialist Managing Editor Brian Anderson reports on the "Great Leap Forward" for RCH Auto Portability represented by the 9/21/21 announcement by Vanguard that it will begin providing plan sponsors with the auto portability solution to simplify small-balance 401k rollovers, expected to launch in mid-2022.

401k Auto Portability’s Significant Benefits to Pending Legislation

Writing in 401k Specialist Magazine, RCH's Tom Hawkins recaps a 9/13/21 Employee Benefit Research Institute (EBRI) webinar (The Impact of Proposed Legislative Changes on Retirement Income Adequacy). In the webinar, EBRI Research Director Jack VanDerhei presented an analysis of pending legislative changes, including automatic contribution plans and arrangements (ACPAs), paired with a refundable saver’s credit. Unsurprisingly, the benefits for these policy initiatives were quite large. However, what was truly surprising was the sheer magnitude of incremental benefits delivered by the addition of auto portability, significantly paring retirement shortfalls for 35–39-year-olds, across all race and ethnicity categories.

Does The ‘Great Resignation’ Make Auto-Portability’s Case?

Writing in 401k Specialist Magazine, Editor-in-Chief John Sullivan astutely links the unusually high turnover in labor markets (the "Great Resignation") to the need for auto portability. Disproportionately affecting Black and Hispanic Americans, Sullivan writes that this unprecedented turnover could "potentially wreak havoc with orphaned retirement accounts and missing participants" and further states "[i]f ever there was a time—and need—for auto portability, this may be it."

Beware of Unintended Effects of Retirement Savings Public Policies

Writing in 401k Specialist Magazine, RCH's Tom Hawkins examines the unintended effects that can result from retirement savings public policies that would dramatically expand access to, and participation in, defined contribution plans. While the benefits are impressive, additional undesired consequences can arise that are antithetical to the policies’ original intent, including increased cashout leakage, missing participants, uncashed checks and forgotten/stranded accounts. Understanding these highly predictable "second order" effects, Hawkins identifies plan-to-plan portability as an effective means of addressing them, while significantly boosting the overall policies’ benefits.

Don’t relegate lost and missing accounts to the lost and found — consolidate them in the retirement system

Writing in Employee Benefit News, RCH President & CEO Spencer Williams opines on draft provisions in SECURE 2.0 legislation that call for establishment of a “lost & found” – including housing sub-$1,000 balances for all terminating 401(k) participants. As proposed, Williams observes that simply moving sub-$1,000 balances to the PBGC does little to reduce cashouts or stranded savings and offers auto portability as a “far more constructive method” to reduce cashouts and to promote consolidation of retirement savings.

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45 Years In, a DC Vet Shifts Gears

The 401k Wire's Neal Anderson speaks with Tom Johnson, legendary veteran retirement industry executive and former RCH EVP of Public Policy. Johnson, ever the professional, discusses his experiences with RCH and with RCH's President & CEO Spencer Williams, and has high praise for Renee Wilder Guerin, who has taken over his role with the firm. Johnson also explains that he'll continue in a consulting role with RCH until the end of 2021.

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