News

Bipartisan Bill Backs Auto-Portability

Writing in NAPA Net, ARA Chief Content Officer Nevin Adams briefs readers on the 6/15/22 announcement of the bipartisan Advancing Auto Portability Act of 2022, introduced in the U.S. Senate by Senators Tim Scott (R-SC) and Sherrod Brown (D-OH). Adams notes the primary features of the legislation, mentions the role of Retirement Clearinghouse (RCH) and advises his readership to "stay tuned."

Senators Scott, Brown Introduce Bill to Increase Retirement Security

Today, U.S. Senators Tim Scott (R-S.C.) and Sherrod Brown (D-Ohio) introduced the Advancing Auto-Portability Act of 2022, a bill that would allow a worker’s 401(k) savings account to be automatically rolled over from a previous employer to a new employer. The legislation would cut red tape to help Americans who change jobs frequently to increase retirement savings.

The Worst 401(k) Mistake You Can Make When You Switch Jobs

Bloomberg's Suzanne Woolley examines the increased phenomenon of "job-hopping" which places workers at an increased risk of "making one of the biggest financial mistakes out there" -- cashing out their 401(k) balances. Woolley references the RCH Cashout Calculator and notes that Vanguard's latest How America Saves report references auto portability as a "solution to cashouts that it will offer plan sponsors within a few months." "That could have a big impact" continues Woolley, citing EBRI's $1.5 trillion savings projection for auto portability.

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Vanguard: Retirement Plans Should Evolve for the Modern Worker

On June 7th, Vanguard released the newest edition of How America Saves, the firm’s seminal report on 401(k) plan design and retirement savings habits. Through its annual, comprehensive analysis of nearly five million 401(k) accounts recordkept at Vanguard, the report reveals additional plan design opportunities employers can address to further improve workers’ retirement readiness. In the release, under key findings, Vanguard notes that "cash outs disproportionately impact younger, low-balance participants" and adds that "[a]uto portability services and revisions to minimum balance rules can help decrease cash out rates."

Leakproof Your Plan

Writing in the April-May edition of PLANSPONSOR magazine, Karen Wittwer and Noah Zuss collaborate to examine steps that plan sponsors can take to "leakproof" their retirement plans and to safeguard their participants' retirement savings from unnecessary leakage. Wittwer and Zuss turn to several industry sources, including RCH's EVP & Chief Revenue Officer Neal Ringquist and Tom Hawkins, SVP, Marketing & Research. In his remarks, Ringquist emphasizes the importance of addressing cashout leakage as the top priority, and striking a balance when it comes to restricting in-service withdrawals, while Hawkins cites the importance of providing education and assistance to new hires as well as to newly-separated participants.

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5 New Automatic Rollover Criteria for 401k Plan Sponsors

In his latest piece in 401k Specialist, RCH's Tom Hawkins writes that the criteria for selecting an automatic rollover IRA provider have fundamentally changed. In the past, most 401(k) plan sponsors simply accepted the solution offered through their recordkeeper or TPA. While others performed due diligence, they applied a limited set of criteria including basic fees, investment options and accountholder service. Few considered the grim realities facing terminated participants forced out into safe harbor IRAs, including excessive cashouts, forgotten accounts, hidden fees, and barriers to exit. Now, writes Hawkins, it's incumbent upon plan sponsors to fundamentally “re-think” these programs, incorporating 5 new criteria to ensure that their automatic rollover IRA programs are fiduciary-friendly, while dramatically improving participants’ retirement outcomes.

Press the magic (benefits) button

Writing in BenefitsPRO, Omaha-based benefits consultant Marty Traynor examines the status of technology in today's HR benefits world, and identifies serious shortcomings, writing that "neither employers nor employees think the process supporting employee benefits is as easy to work with as it should be." Building a list of 8 technology-based processes that could bridge the gap, Traynor includes auto portability in the list, envisioning the day "[w]hen an employee changes jobs or retires—auto portability processes...support continuing portable coverages."

401k Portability in Four Movements: Case Study

Writing in 401k Specialist, RCH's Tom Hawkins examines the experience of a very large (250,000+ participants) 401(k) plan sponsor that has been highly successful in delivering improved participant outcomes by incrementally adopting a full program of retirement savings portability. Looking at four distinct five-year periods that coincided with increasing levels of portability and improved participant outcomes, Hawkins writes that "there’s no finer example of those [improved] outcomes than the multi-year, real-world experience of this plan sponsor, where thousands of participants increased their prospects for a timely and comfortable retirement."