Consolidation Corner

On 11/7/18, the U.S. Department of Labor (DOL) proposed a Prohibited Transaction Exemption (PTE) for Retirement Clearinghouse’s (RCH) auto portability program, allowing for public comments by 12/24/18. On 1/7/19, after a brief delay triggered by the partial federal government shutdown, all official public comments were posted.

As we pause at the end of 2018 to count our blessing and to celebrate the Holidays, we at Retirement Clearinghouse (RCH) find ourselves grateful for a very successful year.

With the announcement of the Department of Labor’s recent actions, auto portability has taken center stage in the retirement industry. While auto portability has been well-known to a relatively small group of industry insiders, its recent, widespread coverage in the media has many asking the question “what is auto portability?”

With so many different -- and important -- perspectives on the matter, the best answer will depend on who’s asking the question. 

When auto enrollment was widely adopted under the Pension Protection Act of 2006, it was a well-intentioned idea for helping Americans save more for retirement.

But in this case, what seemed like the perfect recipe for increasing retirement savings for hardworking Americans was missing a key ingredient.

The Department of Labor (DOL) has issued its 11/06/18 Advisory Opinion 2018-01A on Auto Portability, which can be accessed on the DOL’s website at this link.

A primary responsibility for fiduciaries is to seek out and identify the best available solutions that enable fulfillment of their responsibilities. For plan sponsors tasked with implementing and evaluating the effectiveness of their missing participant program, this can be a difficult task, particularly given the accelerating rate of technological innovation and the virtual explosion of new sources of data available online. In today’s day and age, what is considered a state-of-the-art program today could easily become obsolete tomorrow, rendering a plan’s missing-participant program vulnerable to fiduciary liability. 

Over the past few years, we’ve written extensively about auto portability -- what it is, how it works and the significant, positive impact it will have on the retirement security of working Americans.  Our positions have been supported by research, predictive models (including EBRI’s RSPM) and real-world results from the initial implementation of auto portability.

In this article, we address an important retirement public policy question: How would a pairing of auto portability with open multiple employer plans (or “open MEPs”) impact the retirement savings of America’s minorities, and particularly, African-Americans?

In observance of National 401(k) Day, we’ve compiled three unique 401(k) “hacks” – simple but clever tips for managing your retirement savings more easily and efficiently.

With unemployment nearing historic lows, more career opportunity inevitably translates into greater job mobility. That means that more 401(k) participants will be changing jobs and will face important decisions on what to do with their retirement savings.

It was the best of times, it was the worst of times. 

For job-changing 401(k) participants with balances greater than $15,000, it was the spring of financial wellness, as the bulk of their retirement savings would remain intact.  For less-aristocratic 401(k) savers with balances below $15,000, it was the winter of despair, as most of their savings would be lost on the cashout chopping block or forcibly exiled to a safe harbor IRA, where more savings would perish.