News

Auto portability is poised to make an even bigger impact in 2024

Writing in Employee Benefit News, RCH President & CEO Spencer Williams looks ahead to the New Year, when a key provision of the SECURE 2.0 Act—increasing the limit on small 401(k) accounts subject to automatic rollovers into safe-harbor IRAs from $5,000 to $7,000—goes into effect. While this development will cause more job-changing participants to be subject to automatic rollover provisions, the advent of auto portability could mean that these participants could ultimately fare much better, as auto portability's adoption accelerates. Williams references new results from RCH's Auto Portability Simulation (APS), which indicate that the new provisions -- when combined with auto portability -- could deliver even greater benefits in terms of reducing cashout leakage and preserving retirement savings, and offers plan sponsors with two New Year's resolutions to proactively respond to the changes.

Previously featured in RCH's Consolidation Corner Blog

Retirement Clearinghouse Notes 4 Key Findings on Auto-Portability

Writing in PlanAdviser, Natalie Lin reports on Retirement Clearinghouse (RCH) releasing an updated version of their Auto Portability Simulation (APS). Lin observes that the new simulation model incorporates new data and assumptions and is supportive of the industry-led initiative undertaken by the Portability Services Network, a consortium of large defined contribution recordkeepers dedicated to auto portability's adoption. In addition to summarizing the study's key findings, Lin writes that "[t]he study supports the consortium’s ultimate goal of getting all retirement plans in the country to automatically port over small balances instead of cashing them out to the participant or pushing them into an individual retirement account."

Auto Portability to Help Boost Wealth by $1.6 Trillion Over 40 Years

NAPA Net's Ted Godbout covers a new study released by Retirement Clearinghouse -- Revisiting the Auto Portability Simulation: The Impact of the Portability Services Network, SECURE 2.0 and Expanded Access -- which addresses the findings from a newly-updated discrete event simulation which models the 40-year results of auto portability. Godbout summarizes the four key findings noted in the study, which include an increase in the number of affected job-changers, greater reductions in cashout leakage, an increase in incremental retirement savings preserved, and a more positive impact of auto portability upon minorities.

Small-Balance Retirement Account Holders to See Significant Changes in 2024

PLANSPONSOR's Remy Samuels covers developments surrounding small-balance accounts, including the 12/29/23 increase of the mandatory distribution threshold from $5,000 to $7,000, the recent announcement by the Portability Services Network (PSN) of live operations, and the release by Retirement Clearinghouse (RCH) of an updated version of its Auto Portability Simulation (APS). Samuels briefs her readers on all of these developments, and offers a summary of key results from RCH's new APS model.

4 Key Findings from the New Auto Portability Simulation

Writing in 401k Specialist, RCH's Tom Hawkins summarizes the four key findings from the firm's Auto Portability Simulation (APS), a discrete event simulation that models the impacts of auto portability over a 40-year period, and are detailed in a new white paper, Revisiting the Auto Portability Simulation: The Impact of the Portability Services Network, SECURE 2.0 and Expanded Access. Hawkins contends that the new APS analysis has improved the model’s predictive accuracy by incorporating new parameters that reflect “changing realities” driven by three major developments: 1) the advent of the Portability Services Network, 2) the passage of the SECURE 2.0 Act and 3) ongoing progress in expanding access to workplace retirement savings plans. The paper's key findings highlight the growth of the participant population that will be subject to mandatory distributions, as well as auto portability’s effects on reducing cashout leakage, generating incremental retirement wealth, and delivering benefits to minorities and lower-income workers.

Your Old 401(k): Out of Sight, Out of Mind and Out of Money

Journalist Brian J. O'Connor, writing in the New York Times, highlights the problems faced by job-changing 401(k) participants who leave behind small balances with their former employers, where they can be subject to their mandatory distribution provisions. O'Connor turns to RCH President & CEO Spencer Williams, who sets the system-wide value of lost savings at $1.5 trillion. The piece also mentions the formation of the Portability Services Network, a "voluntary network includes Alight Solutions, Empower, Fidelity Investments, Principal, TIAA and Vanguard and uses technology from Retirement Clearinghouse."

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Also featured in ZeroHedge, and BNN Breaking

Episode 59: Auto-Portability with Neal Ringquist

RCH Executive Vice President & Chief Revenue Officer Neal Ringquist joins hosts Jennifer Doss and Audrey Wheat on CAPTRUST's Revamping Retirement podcast, which aired on 12/15/23. In the podcast's discussion on auto-portability, Ringquist emphasizes the advantages and benefits of auto-portability for both the participant and the plan sponsor. These benefits include: increased average account balances, reduced administrative hassles associated with managing multiple accounts, reduced cash-out leakage (especially for individuals with lower incomes) and improved retirement outcomes for participants.

Auto Portability: It’s All About the Participants

Writing in 401k Specialist, RCH's Tom Hawkins reminds readers what auto portability is all about -- improving the retirement security of marginalized defined contribution participants. These participants -- comprised largely of minorities, women, younger and lower-income participants -- not only need auto portability the most, but there's solid evidence that they want it as well. To support his claim, Hawkins cites three highly-regarded surveys that have found a strong participant preference for auto portability and for consolidating small balances within the defined contribution system, and believes that recent developments will "augur well for Americans’ retirement security."