News

What The Great Resignation Means For 401(k) Accounts

Stephanie Zaleski, CPA and Employee Benefit Plan Services professional for ORBA, authors an article in Mondaq.com addressing the implications of The Great Resignation for sponsors of 401(k) plans. In her piece, Zaleski highlights the increased pace of job-changing, which creates an abundance of left-behind and potentially forgotten 401(k) accounts, resulting in a plethora of problems for sponsors. "To help mitigate these issues in the future, some employers are adopting auto-portability benefits" writes Zaleski, adding that auto portability "automatically transfer small balances to new employers." Zaleski closes by suggesting that plan sponsors should not "waste a plan restatement cycle" and act by July 31st to include new provisions in their defined contribution plans.

Auto portability seen as plug for 401(k) leaks

In her 4/25/22 article, Pensions & Investments reporter Margarida Correia examines auto portability's role in plugging leakage for small-balance 401(k) accounts. In her piece, Correia turns to several industry observers, including RCH EVP & Chief Revenue Officer Neal Ringquist, Alight Solutions' Director of Public Policy Greg Long and Vanguard's Head of Strategic Retirement Consulting David Stinnett. All three offered optimistic views of auto portability's efficacy, its attractiveness to plan sponsors, and its prospects for success. While auto portability is in the early stages of adoption and is building plan sponsor awareness, Long stated that auto portability will eventually "be standard operating procedure" while Stinnett added that "[p]lan sponsors are interested to find out more once the service is fully available."

How to Fill the ‘Leaky’ 401k Bucket

Writing in 401k Specialist, RCH’s Tom Hawkins opines on pending legislation that seeks to expand access for under-served and under-saved demographic segments, but may fall short if it fails to incorporate measures that minimize cashout leakage. Noting that SECURE 2.0’s expanded access provisions seek to benefit women, minorities and lower-income workers – the same demographic segments that cash out their small balance savings at disproportionate rates – Hawkins suggests that legislators consider inclusion of measures that would “spur more rapid adoption” of auto portability “by codifying into law the guidance issued by the Department of Labor and by creating modest tax incentives to encourage more early adoption of the feature.”

How could changing regulatory and business practices help to reduce 401(k) leakage?

Writing in their Research Minute blog, the DCIIA Retirement Research Center recaps a presentation by David John, senior strategic policy advisor at AARP, at their March 2022 RRC Summit. John shared current and ongoing research on retirement rollovers and the problem of plan leakage, including voicing his support for "supporting 'automatic portability' rollovers between employer plans when employees change jobs."

401k Auto Portability Featured in Senate HELP Committee Hearing

Writing in 401k Specialist Magazine, Renée Wilder Guerin, RCH’s EVP of Public Policy, examines the 3/29/22 hearing held by the U.S. Senate Committee on Health, Education, Labor & Pensions (HELP), which focused on solutions that would enhance retirement security for Americans, particularly those who are under-served and under-saved. Two of the four witnesses, WISER’s Cindy Hounsell and The Aspen Institute’s Ida Rademacher offered testimony highlighting the benefits of auto portability in leveling the playing field for women, minorities, and lower income workers. The latest hearing, writes Wilder Guerin “builds on previous Senate hearings and fuels growing momentum for auto portability among legislators, policymakers, advocacy groups, providers and plan sponsors.”

PSCA Executive Report Recaps Senate HELP Committee Hearing

PSCA's Executive Report provides its plan sponsor membership with highlights from the 3/29/22 U.S. Senate HELP Committee's hearing on improving retirement security. The hearing featured testimony from Cindy Hounsell, President and Founder of the Women’s Institute for a Secure Retirement (WISER), and Ida Rademacher (The Aspen Institute), who both addressed the need for improved retirement savings portability. Hounsell's testimony referenced three interventions that could help, including "auto-portability to help prevent workers who change jobs from cashing out their retirement savings. "

Senate HELP Committee to Act on Retirement Security Legislation

NAPA Net's Ted Godbout covers the 3/29/22 U.S. Senate HELP Committee's hearing on improving retirement security. The hearing featured testimony from Cindy Hounsell, President and Founder of the Women’s Institute for a Secure Retirement (WISER), and Ida Rademacher (The Aspen Institute), who both addressed the need for enhanced retirement savings portability. Hounsell's testimony referenced three interventions that could help, including "auto-portability to help prevent workers who change jobs from cashing out their retirement savings. "

Also featured in ASPPA Net

Auto Portability May Help Manage Fiduciary Risk

Writing for 401kTV, Steff Chalk, Executive Director of The Retirement Advisor University, examines the perspective offered by RCH President & CEO Spencer Williams, whose recent article in BenefitsPro suggests that the Hughes v. Northwestern University ruling could expose plan sponsors to fiduciary risk related to excess cash-out leakage. Since auto portability acts to preserve retirement savings, Chalk writes that "auto portability may be making a grand entrance" and the recent developments "appear to make auto portability solutions worthy of sponsors’ consideration."