Public Policy

Safeguarding Retirement Savings: Inside Secure Act 2.0 Key Priorities

BDO Alliance USA, among the industry’s largest associations of accounting and professional service firms, evaluates key priorities contained within recent SECURE 2.0 legislation, and includes an analysis of Section 120 of the act, which addresses auto portability. The piece notes that the auto portability "provision enhances portability by allowing the plan sponsor to now transfer the former employee’s default IRA assets (established at termination) into the participant’s new employer’s plan. The provision both curtails asset leakage from ERISA plans and helps alleviates the missing participant issue." The article also notes a related provision of the legislation -- Section 304 -- that increases the dollar limit for plan sponsors to automatically cash out a former employee’s retirement plan from $5,000 to $7,000, starting in 2024.

Leveraging SECURE 2.0 to Earn More 401(k) Business

Writing in NAPA Net, 401(k) Marketing's founder & CMO Rebecca Hourihan offers tips to plan advisors on how they can leverage awareness of SECURE 2.0 provisions to update plan fiduciaries and earn more 401(k) business. Hourihan focuses on components of SECURE 2.0 that deal with small account balances, including an increase to allowable safe harbor IRA balances and auto portability, as delivered by "a network of recordkeepers." Hourihan suggests that advisors "discuss the benefits of adding....auto-portability to plans now" and comes down firmly on the side of plan-to-plan consolidation, counseling advisors "to help employees consolidate accounts and encourage more assets into the plan" by incorporating "strong calls-to-action during enrollment and education meetings."

The Impact Of SECURE 2.0 On Americans’ Retirement Readiness

Writing in Private Wealth Magazine, noted private wealth expert Russ Alan Prince interviews Neal Ringquist, RCH's EVP and Chief Revenue Officer, about which SECURE 2.0 provisions Ringquist feels will impact retirement savings most, and what advice advisors should give their clients regarding these provisions. In the interview, Ringquist draws attention to SECURE 2.0 provisions that codify auto portability, as well as the related provision that increases the limit on 401(k) account balances that can be automatically cashed out by sponsors and recordkeepers and transferred to default IRAs, from $5,000 to $7,000. Ringquist offers Prince a compelling primer on why these provisions will reduce cashout leakage, benefitting plan sponsors, participants and the advisors who serve them.

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.

Rapid Change, Real Momentum: Assessing America’s Progress Toward Inclusive Retirement Savings

In October 2022, policymakers, financial services executives, academics, advocacy leaders, and financial technology innovators gathered for the sixth annual Aspen Leadership Forum on Retirement Savings. An in-person event for the first time since early 2020, this Forum set out to advance solutions to ensure that everyone in America can benefit from our retirement savings system. The just-released report from that meeting identifies retirement plan portability as vital to addressing the problem of job-changing and cashout leakage, and the report heaps superlatives on the newly-formed Portability Services Network, an industry-led consortium dedicated to the adoption of auto portability.

This simple way to fix the wealth gap between Blacks and Whites is far better than reparations

Fox News Senior Political Analyst Juan Williams, prominently featured on live network TV, writes a FoxNews.com opinion piece, where he profiles entrepreneur Robert L. (Bob) Johnson's "better idea" for closing the racial wealth gap -- auto portability. Williams heaps praise upon Johnson and auto portability, which was brought into existence following Johnson's hire of "a veteran retirement industry executive, Spencer Williams, to create the structure for seamless transfer of 401(k) accounts." In the piece, Williams characterizes auto portability as being able "to increase Black wealth through current economic rules instead of placing distant hope in some day seeing reparations."

Also featured in MSN Money

Broadcast Retirement News: Set It and Actually Forget It

In Broadcast Retirement News' segment #1257, anchor Jeff Snyder interviews Laura Quinsby, Center for Retirement Research, Boston College. The segment focuses on recent developments that will allow terminated participants to better track and consolidate their retirement savings, including the new SECURE 2.0-mandated lost-and-found registry, as well as auto portability. Snyder mentions the formation of the auto portability "consortium" or the Portability Services Network (PSN) as a positive development, while Quinsby opines that one indicator of auto portability's success will be an eventual decline in the number of terminated, vested defined contribution accounts, brought about by account consolidation.

Retirement: A new option for job changers

Writing in Kiplinger's Money Power, senior editor Sandra Block examines the plight of job-changing 401(k) participants, who either cash out or strand millions of retirement accounts, and identifies auto portability -- delivered via the Portability Services Network -- as a promising solution. Describing how auto portability will work, Block cites Steve Holman, a principal in Vanguard’s Institutional Investor Group, and Greg Long, head of public policy for Alight Solutions.