Consolidation Corner

EBRI Policy Forum Delivers Latest Research on Auto Portability (Video)

Posted by Thomas Johnson on May 17, 2017 3:01:51 PM

 

On Thursday, May 11th, the Employee Benefit Research Institute (EBRI) conducted their 80th Policy Forum.  

 

The EBRI Policy Forum’s theme was “Retirement Policy Directions in 2017 and Beyond” and showcased the topic "Retirement Plan Portability & Public Policy" -- featuring presenters Jack VanDerhei, EBRI Research Director and Spencer Williams, Retirement Clearinghouse's President & CEO.  Together, their presentations provided the latest information and research supporting retirement savings portability, including EBRI research that projects $2 trillion in benefits resulting from the adoption of full Auto Portability.

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Topics: Auto Portability, Cash Outs, Retirement Plan Portability, Video, 401k leakage, EBRI

The Fundamentals of Locating Missing Participants

Posted by Thomas Hawkins on Mar 8, 2017 10:41:38 AM

This video presentation is designed to give the viewer a basic understanding of the principles of locating missing participants in 401(k) plans.

 

The video addresses the following key questions that plan sponsors have regarding the issue of locating missing participants:

  • What is a missing participant?
  • What causes missing participants?
  • Why is it important to locate missing participants?
  • What are the best practices for locating missing participants?
  • What should I look for in a missing participant locator service?

 

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Topics: Missing Participants, Lost Participants, Video

Auto Portability Simulation (APS)

Posted by Spencer Williams on Jan 24, 2017 1:44:02 PM

 

This video presentation is designed to give the viewer a basic understanding of the Auto Portability Simulation (APS), which models the operation and benefits of Auto Portability.

 

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Topics: Auto Portability, RCH Services, Video

The ABCs of Auto Portability

Posted by Thomas Hawkins on Jan 19, 2017 3:53:20 PM

 

 

This video presentation is designed to give the viewer a basic understanding of Auto Portability.

 

What is Auto Portability?

Auto Portability is:

  • The routine, standardized and automated movement of an inactive participant’s retirement account from a former employer’s retirement plan to their active account in a new employer’s plan. 
  • Serves the needs of participants subject to mandatory distribution provisions of their employer-sponsored plan (separated participants with account balances less than $5,000) to curb excessive cash out leakage occurring as participants change jobs.
  • Could be adapted to larger account balances, should public policy dictate a higher mandatory distribution limit.

 

Why is Auto Portability needed?


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Topics: Auto Portability, Managed Portability, Roll-In, Lifetime Plan Participation, Retirement Savings Portability, Thought Leadership, PSCA, Participant transition management, Video

The ABCs of Uncashed 401(k) Distribution Checks

Posted by Thomas Hawkins on Nov 21, 2016 10:22:04 AM

 
 
 
 
 
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This video presentation is designed to give the viewer a basic understanding of the problem of uncashed 401(k) distribution checks.

What are uncashed distribution checks, and why should I care?

Uncashed distribution checks occur when retirement plan participants fail to cash or deposit a distribution from their qualified retirement savings account, for a variety of reasons, including:

  • an incorrect mailing address
  • a lost or misplaced physical check
  • a distribution check that was not anticipated 
  • as the result of inaction on the part of the participant  

Uncashed distribution checks are a growing problem for plan sponsors, as the numbers of small-balance accounts and separated participants grow. For qualified plans, uncashed distribution checks can represent a fiduciary liability, since the amounts must be considered plan assets until the check is cashed or otherwise resolved. Over time, the numbers of uncashed checks can mount, along with the administrative burden and fiduciary risk.

Plans can take steps to minimize the incidence of uncashed distribution checks, as well as to resolve the situations that inevitably occur.

Why do uncashed distribution checks occur?

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Topics: Managed Portability, Roll-In, Retirement Savings Portability, Participant transition management, Stale Dated Checks, Video

What Plan Sponsors Can Do to Plug 401(k) Plan Leakage

Posted by Thomas Hawkins on Nov 4, 2016 8:01:42 AM

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This video presentation is designed to provide qualified retirement plan sponsors with an overview of key actions that they can take in order to help reduce 401(k) plan leakage.

Why is 401(k) Plan Leakage a Problem?
401(k) leakage is a large -- and growing – problem: 

  • Every year, the GAO estimates that billions of dollars of retirement savings are prematurely removed from our nation’s defined contribution plans.
  • Leakage studies by large recordkeepers tell a consistently grim story, including cashout levels as high as 60% at job change, depending upon the balance segment.
  • EBRI estimates that, if cashout leakage were reduced by just one-half, we would add over $1.3 trillion in retirement savings in just over 10 years.

Fortunately, there are concrete, proven steps that plan sponsors can take that will not only reduce leakage, but can increase participants’ retirement readiness, streamline your plan and trim your administrative burden.

1. Recognize the big leakage problem: cashouts at job change
Plan sponsors should understand that:

  • 89% of leakage comes in the form of cashouts that occur post-separation1, when job-changing Americans confront a system that makes it difficult to easily transfer their retirement savings from one plan to the next.
  • This lack of portability means that cashing out is a huge temptation. Almost 2/3 of separated participants who cash out are doing so for reasons other than economic hardship2.  Most participants who cash out will regret it later
  • Those who don’t cash out can often leave small, stranded 401(k) balances behind.
    1 -  GAO, Report to the Chairman, Senate Committee on Aging, August 2009
    2 -  Boston Research Technologies, Actionable Insights for America’s Mobile Workforce, May 2015

So what can plan sponsors do? Let’s look first at newly-separated plan participants.

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Topics: Managed Portability, Roll-In, Retirement Savings Portability, Participant transition management, Video

It’s The Final Countdown for 2016 401(k) Plan Terminations

Posted by Thomas Hawkins on Oct 10, 2016 3:56:55 PM

As we enter the 4th quarter of 2016, many plan sponsors – for a variety of reasons – are faced with the prospect of a 401(k) plan termination.  For most, this will be the first -- and only -- time that they’ll undertake this important project. 

 

If you’re facing a plan termination in the 2016 calendar year, time is not on your side.  A properly-conducted plan termination can take up to 2-3 months from start-to-finish, and requires significant planning, flawless execution and lots of attention to detail. 

 

A poorly-executed plan termination could result in your plan not being properly terminated -- or worse -- you could be facing an audit.

 

To assist sponsors in understanding the basics about terminating 401(k) plans, Retirement Clearinghouse has prepared a free, three-part video series, immediately accessible via the links below:

 

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Topics: Managed Portability, Roll-In, Retirement Savings Portability, Participant transition management, Video

Five Misconceptions About 401(k) Leakage

Posted by Thomas Hawkins on Sep 27, 2016 8:30:00 AM

 
 
 
 
 
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This video presentation is designed to provide qualified retirement plan sponsors with an understanding of the facts and popular misconceptions surrounding the topic of 401(k) plan leakage.

What is 401(k) leakage, and why should I care?

401(k) leakage is the premature distribution of retirement savings, prior to normal retirement age, and can deprive plan participants of a timely or comfortable retirement. 

  • The largest recordkeepers have produced studies that analyze leakage, and they all agree: it’s a big problem.
  • The ERISA Advisory Council has taken up the issue of promoting lifetime plan participation, which – in large part – examines how to minimize this problem.
  • High levels of cashouts adversely impact plan metrics, reduce average balances and increase recordkeeping fees.

However, there are plenty of misconceptions about 401(k) leakage. Let’s examine five of them.

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Topics: Managed Portability, Roll-In, Retirement Savings Portability, Participant transition management, Video

A Plan Sponsor’s Guide to Supporting Roll-ins

Posted by Thomas Hawkins on Sep 2, 2016 3:15:08 PM

 
 
 
 
 
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Why should plans care about roll-in contributions?

Establishing a program that encourages participant rollover contributions (or “roll-ins”) is one of the most beneficial programs that a plan can implement.

For participants, roll-ins:

  1. Consolidate retirement savings
  2. Reduce fees from holding multiple retirement accounts
  3. Simplify retirement planning
  4. Are proven to decrease the incidence of cashouts

For plans, roll-ins:

  1. Increase average balances
  2. Enhance financial wellness metrics
  3. Reduce the number of small accounts
  4. Improve the effectiveness of in-plan retirement income solutions

What steps can a plan take to support roll-ins?

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Topics: Managed Portability, Roll-In, Retirement Savings Portability, Participant transition management, Video

The ABCs of Roll-Ins

Posted by Thomas Hawkins on Aug 15, 2016 1:54:28 PM

With the advent of the Department of Labor's Fiduciary Rule, more employers are looking to promote lifetime plan participation and encourage participants to consolidate retirement assets in their current, active 401(k) plan. The plan feature to enable consolidation in the active 401(k) plan is the roll-in contribution. Retirement Clearinghouse is the recognized thought leader in roll-in facilitation.  We have prepared this video - The ABCs of Roll-Ins -- as a resource for plan sponsors who are considering a formal roll-in program, as well as offering a roll-in facilitation service for their plan participants. 

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Topics: Auto Portability, Managed Portability, Roll-In, Lifetime Plan Participation, Retirement Savings Portability, Thought Leadership, PSCA, Participant transition management, Video

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