Consolidation Corner

Big Changes Coming for Small 401(k) Accounts

Posted by Thomas Hawkins on Feb 27, 2017 10:27:59 AM

 

The pace of change in today’s world is faster than ever -- and accelerating.  Consider the vast change witnessed by today’s centenarians over the course of their lives – moving from the horse-and-buggy to aviation, moon landings, the Internet and smartphones.

 

However, changes to America’s retirement system seem to unfold more slowly – sometimes moving at “the speed of retirement” – a glacial process driven by the moribund pace of legislation, further establishment of rules by regulatory agencies, the delivery of new features by service providers, eventual adoption by the plan sponsor community, and finally – by the individual actions of participants over the course of their working lives. 

 

Even truly transformative change, such as automatic enrollment and default investments such as target-date funds, took years to germinate before legislative action, in the form of the Pension Protection Act, provided the clarity that gave their adoption a needed jump start.

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Topics: Auto Portability, Safe Harbor IRA, Automatic Rollovers, Cash Outs, America's Mobile Workforce, Boston Research Technologies, Automatic Rollover, auto portability simulation

What you won’t hear in commencement addresses

Posted by Neal Ringquist on May 9, 2016 3:47:47 PM

In his May 9th article in MarketWatch’s Retirement Mentors blog, RCH President & CEO Spencer Williams offers sage advice to college graduates as they enter the workforce:  consolidate your retirement savings! 

Citing job-changing statistics from EBRI, as well as the poor decisions made to cash out or strand retirement savings.  Williams also points to a 2015 study of mobile workforce behaviors, conducted by Boston Research Technologies, which found that 32.8% of workers left behind their retirement savings in their most recent, former employer’s plan, despite the fact that almost 98% of plans are able to accept roll-ins from other plans.

College graduates will learn the value of a dollar soon enough, says Williams, who advises these new savers to begin saving early, often – and, when changing jobs -- to move their retirement savings forward to their current employer’s plan.

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Topics: 401(k) Consolidation, America's Mobile Workforce, Boston Research Technologies

As 401(k) Cash Out Leakage Grows, So Does Need for Auto Portability

Posted by Neal Ringquist on Dec 15, 2015 11:32:38 AM

In his December 11th article in BenefitsPro (Addressing the Critical Problem of 401(k) Cash Outs), Nick Thornton draws much-needed attention to the magnitude of the 401(k) cash out leakage issue, due to the frictions associated with account portability when plan participants switch jobs. Thornton’s article rightly emphasizes the need for automated portability – similar to automatic enrollment and deferral increases - to effectively address the cash out problem. 

 

Let’s examine the leakage problem in more detail.

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Topics: Auto Portability, Cash Outs, Lifetime Plan Participation, Leakage, America's Mobile Workforce, Auto Enrollment, Boston Research Technologies

Boomers: Consolidate Your Retirement Accounts Immediately!

Posted by Neal Ringquist on Nov 16, 2015 2:18:39 PM

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In his 11/16/15 MarketWatch article Boomers need to consolidate retirement accounts immediately RCH President & CEO J. Spencer Williams notes that the baby boomer generation, which is closest to retirement age, stands to benefit the most from consolidating their retirement savings, vs. leaving their accounts behind at former employers.

 

Citing research conducted by Boston Research Technologies on America’s Mobile Workforce, Williams notes that while 50.3% of boomers indicate that they’ve left behind a 401(k) savings account at least once when changing jobs, their generation is less-likely than millennials or Gen-Xers to take advantage of a plan roll-in service, if offered by their employer.  

 

To overcome the resistance, Williams gives some practical advice to get started, and using a travel analogy, advises boomers to get “their bags packed and their boarding passes ready” by moving their retirement savings forward.

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Topics: 401(k) Consolidation, Managed Portability, Roll-In, America's Mobile Workforce, Boston Research Technologies

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