As Vice President of Sales & Marketing, Tom Hawkins oversees all key operational aspects of sales and marketing, including RCH's web presence, digital marketing and plan sponsor proposals. In other roles for RCH, Hawkins has performed product development, helped lead the company's re-branding, evaluated & organized industry data and made significant contributions to RCH thought leadership positions.
Hawkins has had a long & successful career in both the consulting & financial services sectors. Prior to joining Retirement Clearinghouse, Hawkins led Firm Resolve, LLC, a consultancy serving independent businesses. For MassMutual, Hawkins played a variety of roles, including the CEO of MassMutual Japan, Regional Executive / Latin America & Europe, and Division Head, Structured Settlements. Hawkins was also Senior Vice President, First Union National Bank and leader of their International Product Services group. Finally, Hawkins served as senior consulting manager for Accenture.
Hawkins holds a bachelor of arts degree from the University of North Carolina - Charlotte, and a master's in business administration from the Babcock Graduate School (Wake Forest University).
Meanwhile, as a practical matter, fiduciaries of ongoing plans must still confront the problem of locating missing participants, and must do so with incomplete guidance. If audited, they’ll potentially face “ad hoc” enforcement positions by the DOL, which the Council asserts have been inconsistent and, in many cases, unreasonable.
This article focuses on the Council’s specific recommendations to the DOL as set forth in their letter. The Council’s recommendations, if adopted, could establish a more complete, consistent and reasonable framework for plans to address the missing participant problem, going forward.
The central focus of the Council’s letter is the need for comprehensive and consistent guidance for plan sponsors in locating missing participants, a critical process that’s necessary to satisfy the DoL’s goal of ensuring that all participants receive their retirement benefits.
In seeking clarity and consistency, the Council seems to have hit their mark, laying out a series of recommendations for an adaptive framework, based on the lifecycle of terminated, vested employees that includes the periods before, just prior to, and following distribution events.
If adopted, the recommendations would supply desperately needed direction to fiduciaries of ongoing retirement plans, as well as providing a predictable framework for the DoL’s enforcement actions.
What’s Missing: A Strategic Solution for Missing Participants
As importantly, a careful read of the letter indicates the Council also grasps the larger dynamics of the missing participant problem, correctly identifying its underlying root causes.
It’s generally accepted that the small-balance accounts of terminated 401(k) plan participants have been a problem for plan sponsors, resulting in increased plan costs, fiduciary risk and other ancillary problems, such as missing participants and uncashed distribution checks.
Now, based on new information from EBRI and other sources, we’re learning that small accounts are a large and growing problem for active participants as well.
If no action is taken to make retirement savings more portable, an increasingly mobile workforce will ensure that this collective “explosion” in small accounts will exacerbate headaches for plan sponsors. For participants with small accounts, research indicates that bad outcomes will only worsen as they leave savings behind or cash out entirely.
Looking Back: The Impact of Public Policy on Small Accounts
The problem of small accounts -- for both terminated and active participants – didn’t happen overnight, and has been influenced over many years by public policy, resulting in a decidedly mixed bag of outcomes.
As we enter the 4th quarter of 2017, many plan sponsors (as well as their advisors) will face the prospect of terminating a 401(k) plan. For most, this will be the first -- and only -- time that they’ll undertake this important initiative, typically without the benefit of prior experience.
Unfortunately, many sponsors in this position will realize too late that time is not on their side, and will be scrambling to perform all the steps necessary to effectively terminate their plans.
When conducted properly, a 401(k) plan termination can take up to 4 months, from start-to-finish, and will require significant planning, flawless execution and strict attention to detail. On the other hand, a poorly-executed plan termination could result in your plan not being properly terminated, which could result in delay, additional expenses -- and even worse -- the scrutiny of a DOL or IRS audit.
To educate sponsors in understanding the basics of terminating 401(k) plans, Retirement Clearinghouse has prepared a three-part video series.
On May 12th, Retirement Clearinghouse announced the National Retirement Savings Cashout Clock, a virtual clock that calculates 2017 year-to-date cashout leakage from America’s defined contribution system in real time.
When it was announced, the Cashout Clock had already registered $24.4 billion in cashouts.
Since then, the Cashout Clock has relentlessly advanced, adding another $16 billion to cross the $40 billion mark in late July. As of this writing, $42.3 billion in cashouts have occurred thus far in 2017. If nothing happens to stem the flow, then we’ll reach $68 billion in cashouts by year’s end.
On July 11th, 2017, a small group of retirement services professionals at Retirement Clearinghouse (RCH) successfully conducted the first-use of a new and important financial technology. Known as “locate & match” -- the technology represents a breakthrough in the ability to automatically move small balances forward in America’s defined contribution system, and forms the backbone of RCH Auto Portability.
For the first time, auto portability is now live in America’s defined contribution system.
In recent months, our attention has been drawn to some deserving public policy initiatives that would dramatically expand access to workplace retirement savings accounts and address the “access gap” encountered by millions of American workers who are presently offered no such option.
The access gap is very real. According to an analysis of the U.S. Census Survey of Income and Program Participation, The Pew Charitable Trusts estimates that 36.2% of American workers do not have access to either a defined benefit or defined contribution plan sponsored by their employers.
One proposal relies upon legislative action to eliminate barriers to open multiple-employer plans (MEPs) and requires private employers to auto-enroll their employees in a defined contribution (DC) plan. Thus, universal access to DC plans could become a reality, and the access gap would be quickly bridged.
A surge in new participants contributing to employer-sponsored defined contribution accounts has substantial benefits. The Employee Benefits Research Institute (EBRI) has estimated that universal DC access could contribute $740 billion towards reducing our nation’s $4.1 trillion retirement savings shortfall.
In 1989, New York real estate developer Seymour Durst wanted to highlight America’s rising national debt, and came up with an idea: the National Debt Clock. Since then, the National Debt Clock has had a physical presence as a billboard near Times Square, serving as a constant reminder to Americans of their government’s ever-growing debt.
As of May 12th, the clock indicates that total cash out leakage for 2017 has reached $24.4 billion. If no action is taken to stem this outflow of funds, cash out leakage will eventually reach $68 billion by year’s end.
As we marked the 47th annual Earth Day on April 22nd, we were once again reminded of the need to protect our environment. This heightened awareness is testament to how far Americans have come in both recognizing and curbing the wasteful, destructive behaviors that emerged in the decades following World War II. Those excesses have given rise to conservation and environmentalism, and were heralded by the first Earth Day in 1970.
Today’s Wasteful Behavior: Cash Out Leakage
While we may be more environmentally-conscious these days, we don’t apply the same principles financially. There is a highly-wasteful and harmful behavior that silently robs millions of the prospect for a comfortable or timely retirement. Every year, millions of Americans will needlessly cash out their retirement savings after changing jobs, converting these savings into wasted consumption and avoidable tax penalties.
Individuals should consult their tax advisers or legal counsel for advice and information concerning their particular situation. Retirement Clearinghouse does not give legal, investment, or tax advice. IRA account fees and product information provided by Retirement Clearinghouse, LLC is subject to change without notice at the discretion of the IRA Provider. The financial institutions on the Retirement Clearinghouse marketplace provider network are solely responsible for their products and service. Securities are offered through RCH Securities, LLC, a wholly owned subsidiary of Retirement Clearinghouse, LLC and a member of FINRA (www.finra.org). Rollover Counselors with The Retirement Center are Registered Representatives of RCH Securities, LLC. RCH Shareholder Services is a wholly owned subsidiary of Retirement Clearinghouse, LLC and a registered transfer agent with the U.S. Securities and Exchange Commission.