The Department of Labor (DOL) has issued its 11/06/18 Advisory Opinion 2018-01A on Auto Portability, which can be accessed on the DOL’s website at this link.
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.
A primary responsibility for fiduciaries is to seek out and identify the best available solutions that enable fulfillment of their responsibilities. For plan sponsors tasked with implementing and evaluating the effectiveness of their missing participant program, this can be a difficult task, particularly given the accelerating rate of technological innovation and the virtual explosion of new sources of data available online. In today’s day and age, what is considered a state-of-the-art program today could easily become obsolete tomorrow, rendering a plan’s missing-participant program vulnerable to fiduciary liability.
If current trends continue, approximately 104 million women will cash out almost $800 billion in retirement savings, in today’s dollars, over the next generation.
This eye-popping statistic, presented at a “Women and Retirement Income” roundtable discussion on May 22 sponsored by the Women’s Institute for a Secure Retirement (WISER), underscores the importance of financial wellness initiatives by plan sponsors to help women participants avoid cash-outs and instead preserve their 401(k) savings in the retirement system.
Much has been written recently about the preponderance of lost and missing participants. This predicament, one of the many offshoots of the problem of too many small accounts, is an urgent one for sponsors to address given reports that the Department of Labor (DOL) is focusing on their ability to locate missing participants during plan audits.
The top priorities for these plan sponsors in 2018, outlined in December 2017 by Mercer, include:
Despite differences big and small, all retirement plan sponsors and record-keepers experience at least one common problem—the seemingly intractable incidence of participants who have left behind small accounts in the plans sponsored by their former employers and failed to update their address when they subsequently change residence, a.k.a. missing participants.
How are you hoping to improve yourself in 2018?
The most common New Year’s resolutions usually have to do with personal appearance, health, or behavior—losing weight, exercising more, dieting, quitting smoking, etc. Popular polls indicate that many of us are after a slimmer, fitter body for ourselves after each New Year’s Day.
Similarly, defined contribution plan sponsors are likely thinking about how they can make their plans more attractive and streamlined in 2018.
Much has been written in this column and elsewhere about the benefits that auto portability, and seamless plan-to-plan portability in general, can provide to millions of retirement-savers across America. As any entrepreneur can testify, it is challenging to initiate a major innovation, and then persevere through all the twists and turns along the road to widespread adoption. Fortunately for everyday Americans saving for retirement, there is already an established blueprint in place for launching a nationwide, private-sector retirement clearinghouse that will enable auto portability.