A Brief History of Auto Portability

By Thomas Hawkins
Published on December 2, 2021

Video_Splash-1Auto portability is a new “automatic” plan feature rapidly gaining acceptance by large defined contribution recordkeepers. While the feature is relatively new, it’s tempting to view auto portability as an “overnight success.” In fact, auto portability has been a long time in the making.  In the article and in the embedded video below, please enjoy a “brief history” of auto portability.

 

RCH Auto Portability has been at least 8 years in the making, and there have been some important milestones along the way. Starting in 2014 and continuing to the present day, below are some key events that have occurred along the way.

2014:

  • Department of Labor Advisory Opinion Request Filed:   For the automatic portability of defined contribution accounts less than $5,000.
  • Initial Industry Working Group Meetings: Comprised of trade groups and large defined contribution recordkeepers.
  • U.S. Senate HELP Committee Briefing: Auto portability concept and benefits provided in briefing to the U.S. Senate HELP Committee staff.

2015:

2016:

2017:

  • Auto Portability Pilot Goes Live: RCH Auto Portability implemented at large plan sponsor, in pilot “consent” mode.
  • DOL Guidance Framework Finalized: Initial framework for a DOL auto portability advisory opinion and a prohibited transaction exemption (PTE) is finalized.
  • EBRI Identifies $2 Trillion of Auto Portability Benefits: EBRI presents Retirement Savings Projection Model (RSPM) data revealing $2 trillion in potential benefits for auto portability.
  • Tim Scott, 10 Senators, 11 Trade Orgs Endorse Auto Portability: 10 U.S. Senators, led by Sen. Tim Scott, send letter to DOL Secretary Acosta. Letter is backed by 11 trade organizations who support auto portability.

2018:

  • DOL Advisory Opinion 2018-01A: Clarifies the fiduciary duties with respect to the RCH Auto Portability program and established that RCH -- not the plan sponsor -- has fiduciary responsibility for the decision to transfer a safe harbor IRA balance to a new employer's plan.
  • Prohibited Transaction Exemption Proposed: An exemption is proposed for auto portability, to allow RCH to receive “transfer fees” while establishing participant protections.
  • Common Contract Finalized: A common contractual framework is finalized to standardize and facilitate recordkeeper adoption of auto portability.
  • EBRI Benefits for Demographic Segments: In EBRI Issue Brief #451, EBRI RSPM modeling reveals that auto portability dramatically improves the results of expanded access policy initiatives, reducing retirement shortfalls for ages 35-39 between 17% and 23%.
  • Auto Portability Patent Approved: United States Patent US2013/0185224 A1: System and Method for Automated Consolidation of Individual Retirement Accounts.
  • Widespread Media Coverage Begins: Prompted by favorable research, public policy support and regulatory action, widespread and persistent media coverage begins.

2019:

2020:

2021:

What’s next? Stay tuned for more big events in the very near future!

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