In his September 2nd, 2015 MarketWatch article One Solution to Three Costly Retirement-Saving Mistakes, RCH’s CEO Spencer Williams provides insight as to why a majority of Americans are not very confident in their retirement readiness. Three costly mistakes consistently plague retirement savers: 1) leaving 401(k) accounts behind when changing jobs, 2) prematurely cashing out and 3) not informing prior employers’ retirement plan record-keepers about address changes.
Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
The Case for Automatically Moving Mandatory Distributions Forward
The mandatory distribution-to-Safe Harbor IRA plan feature as commonly utilized today was conceived in 2001 and launched in 2005 with good intentions, and for valid reasons. A mobile workforce, combined with a lack of retirement savings portability, had created a burgeoning problem for plan sponsors: an explosion of small-balance (less than $5,000) accounts left “stranded” in-plan, resulting in rampant cashouts, missing participants, uncashed distribution checks and the like. These problems only accelerated with the widespread adoption of auto enrollment, beginning in 2009.
“Make the smart decision the easiest decision.”
This seems like an obvious goal for plan sponsors when designing participant directed retirement plans, and it’s certainly driven the rapid adoption of the autos – auto enrollment, auto deferral escalation and auto pilot investment options, such as target date funds.
Leaving Your Retirement Savings Behind When You Change Jobs Will Cost You!
In his July 30th, 2015 MarketWatch article titled, Leaving Your 401K Behind When Changing Jobs Will Cost You, RCH’s CEO Spencer Williams gives sage advice to America’s mobile workforce, urging job-changing retirement savers to take the initiative and to consolidate their retirement savings.
"Do You Feel Lucky 401(k) Saver? Do You?"
Collaborating with Retirement Clearinghouse, Boston Research Technologies completed groundbreaking research earlier this year on the mobile workforce and the job changer’s attitudes and behavior regarding their 401(k) accounts during job transition. When asked what these participants did with their prior employer 401(k) accounts, the majority of respondents indicated they left their balances behind with 53% of Millennials, the most mobile age cohort, indicating they had left at least one retirement account with their prior employer.