On June 8th, 2016 Retirement Clearinghouse (RCH) and the Employee Benefit Research Institute (EBRI) teamed up to present consolidated testimony to the ERISA Advisory Council on Auto Portability, the automation of plan-to-plan transfers for small accounts, when participants change jobs.
Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
When the Auto Portability Simulation (APS) model was recently unveiled at EBRI’s 78th Policy Forum, a lot of attention was paid to the “marquee” numbers, and rightly so. I’m referring here to the $154 billion reduction in cashout leakage, as well as the $115 billion increase in plan-to-plan roll-ins that occur under the adoption of Auto Portability.
On May 12th, Retirement Clearinghouse President & CEOJ. Spencer Williams unveiled theAuto Portability Simulation(APS) at theEmployee Benefit Research Institute's 78th Policy Forum. The APS was developed by Retirement Clearinghouse in conjunction with Dr. Ricki Ingalls, Chair of Computer Information Systems at Texas State University, and Principal at Diamond Head Associates, Inc.
In virtually any area of specialty, a unique jargon evolves that’s highly-specific to that field. To insiders using the lingo every day, it seems familiar and perfectly normal. To outside observers, it can feel like a foreign language -- with words, terms and acronyms that make no sense.
As we observe the 46th annual Earth Day this April 22nd, we appreciate the awareness that this event has brought to the need to protect our environment, the urgency that it’s instilled in all of us, and the tangible results that have been achieved in so many important areas. Although we have much work to do, we’ve clearly come a long way since the “throwaway” culture that emerged following World War II.
Automatic rollover programs allow plan sponsors to force out of their plan separated participants with balances less than $5,000 into a Safe Harbor IRA. These programs can be quite effective at helping sponsors resolve many of the problems associated with housing small-balance accounts in-plan, such as:
In a previous post, Tales from the Roll-In Front Lines, Part I, we described a roll-in transaction gone awry: a comedy of errors that occurs all too often when service providers are unfamiliar with consolidating retirement savings from one plan into another.
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.
In his December 1, 2015 article (The unintended consequence of 401(k) auto-enrollment), RCH CEO Spencer Williams exposes the linkage between auto enrollment and lower average account balances. Based on Form 5500 data, Williams’ analysis presents some excellent examples of industries where average balances are significantly lower in plans that have adopted auto enrollment compared to plans that haven’t.
With attention-grabbing headlines about major security breaches occurring almost daily, plan sponsors need to be assured that their service providers are on guard 24-7, protecting sensitive information and intellectual property, wherever it may reside.