Consolidation Corner

March 30th Washington DC Forum to Showcase Retirement Plan Portability & Public Policy

Posted by Thomas Johnson on Mar 23, 2017 6:34:27 AM


An upcoming event in Washington, DC, to be held on March 30th and hosted by the Financial Services Roundtable, promises to be both highly-interesting and informative, addressing the very latest in retirement plan portability research and development.


The event, Retirement Plan Portability & Public Policy: Unlocking the potential in portability, will take place at the Financial Services Roundtable’s headquarters [map] from 10:30 a.m. to Noon, and is free to attend. To register, click here. Click here to view a full agenda.


The event features an all-star lineup of presenters, including:


Key topics include:

  • New research by the Employee Benefit Research Institute (EBRI) on the overall benefits of portability to America’s defined contribution system
  • The latest on Auto Portability, including:
    • Auto Portability Explained
    • The Auto Portability Advisory Opinion
    • An Auto Portability Progress Report
    • Auto Portability & the Future of Portability
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Topics: Auto Portability, 401(k) Consolidation, Plan Portability, America's Mobile Workforce, Retirement Plan Portability, Financial Services Roundtable

The Missing Piece in Retirement Income: Consolidation

Posted by Thomas Hawkins on Apr 14, 2016 8:30:00 AM


Over the span of their working lives, Baby Boomers have witnessed the birth of 401(k) plans as optional, “supplemental” retirement plans, seen the rapid spread of 401(k) plans throughout the U.S. retirement system, and tracked the evolution of the 401(k) plan into the primary – and often, only -- retirement savings plan to be offered by their employers. 


As the first full generation of 401(k) participants begins to retire in record numbers, Boomers have begun to shift gears, focusing on decumulation – the process of converting 401(k) savings into retirement income that will last a lifetime. 


As Boomers begin to sweat decumulation details, many of their employer-plan sponsors are coming to their aid, adopting features that promote lifetime plan participation, not only for Boomers, but for the generations that will follow.  Along with their consultants and recordkeepers, plan sponsors have begun to implement a dizzying array of retirement income solutions that include both in-plan and out-of-plan offerings, encompassing features such as managed drawdowns, guaranteed minimum benefits and so on. 


Let’s be clear: retirement income strategies can be quite complex, as early-adopting plan sponsors have learned.  Optimizing retirement income is a multi-faceted problem, considering an array of potential variables, including assets, life expectancy, market risk, inflation, taxes, health care costs, etc.     


What’s Missing in the Rush to Replicate Salary in Retirement?

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Topics: Retirement Savings Consolidation, Managed Portability, Plan Portability, Roll-In, Lifetime Plan Participation, Retirement Plan Portability, Retirement Income

Tales from the Roll-In Front Lines, Part I

Posted by Thomas Hawkins on Jan 26, 2016 3:44:35 PM


In previous articles, we’ve discussed the many benefits that occur when participants roll in multiple retirement savings accounts into their current employer’s 401(k) account. Participants benefit from reduced cash outs, lower investment fees and simplified retirement planning. A program of facilitated roll-ins delivers positive results for plans as well, including increased average balances, lower recordkeeping costs and improved retirement readiness metrics.


Unfortunately, there are many pitfalls to performing do-it-yourself roll-ins. For those hardy souls willing to undertake the process themselves, DIY roll-ins can often turn into an ordeal they’d not bargained for.


Consequently, the 98% of employers with defined contribution plans that allow roll-ins (source: PSCA 57th Annual Survey of Profit Sharing and 401(k) Plans) should fully-understand these complexities and strongly consider the use of a facilitated roll-in service, which makes the process easy & worry-free for their participants. 


There’s no better way to illustrate the benefits of a facilitated roll-in service than with a real-world example.


John’s Story


John (not his real name) is a 42 year-old employee of a large healthcare organization, with four unconsolidated individual retirement accounts, all held with the same large financial institution. Upon his hire, John learned that his company’s 401(k) plan supported roll-ins, so he decided to roll his IRA balances into his company’s 401(k) plan, saving time and money, and simplifying his retirement planning.


Brimming with confidence, John elected to initiate four roll-in transactions himself.


Things quickly began to go wrong.


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Topics: Retirement Savings Consolidation, Managed Portability, Plan Portability, Roll-In, Lifetime Plan Participation, Retirement Plan Portability

When Small Accounts Are a Big Problem: What Every Plan Sponsor Should Know

Posted by Thomas Hawkins on Oct 12, 2015 3:50:02 PM

Plan sponsors intuitively know that a proliferation of small-balance 401(k) accounts can create problems.  But few sponsors are clear on the factors that give rise to small accounts, and fewer still understand how they can utilize portability programs to solve the problem.  


This article provides plan sponsors with a high-level framework to understand and address the small account problem, including its causes, effects and solutions.


The Key Causes of Small Accounts

Individually, the factors identified below can drive high levels of small accounts.  When combined, these factors can turn small accounts into big problems for plan sponsors.

  • Mobile Workforce: The propensity of the American worker to frequently change jobs – currently estimated to occur over seven (7) times in an average career.
  • Business Growth: Growth, whether by diversification, organic growth, or by acquisition will increase the base number of participants, and tend to increase the incidence of small accounts.
  • Employee Turnover: Certain industries traditionally experience high levels of employee turnover (ex. – retail, health care, food service). This turnover directly drives higher percentages of separated participants in plan, many who leave behind small balances.
  • Auto-Enrollment: Plans that utilize an auto-enrollment feature will enjoy higher participation levels, but will also experience a larger number of small-balance accounts.


Read More

Topics: Auto Portability, Safe Harbor IRA, Automatic Rollovers, Managed Portability, Plan Portability, Roll-In, Lifetime Plan Participation

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