--- title: Re-Thinking the Automatic Rollover IRA description: By incorporating these five new criteria, plan sponsors can ensure that their automatic rollover IRA programs are fiduciary-friendly, while dramatically improving participants’ retirement outcomes. image: https://blog.rch1.com/hubfs/Re-Thinking%20Auto%20Rollover%20IRAs.png --- [![Retirement Clearinghouse Logo](https://blog.rch1.com/hs-fs/hubfs/raw_assets/public/Retirement_Clearinghouse_May2022/images/logo.png?width=1000&height=648&name=logo.png "Retirement Clearinghouse Logo")](https://rch1.com/) [Privacy Policy](https://securities.rch1.com/common/PrivacyStatement.pdf) [Sponsors/Service Providers](https://rch1.com/plan-sponsors) [Individuals](https://rch1.com/individuals) [Login](https://rch1.com/#) - [Home](https://rch1.com/home-page) - [Individuals](https://rch1.com/individuals) - [Individuals Home](https://rch1.com/individuals/individuals-home) - [Who is RCH?](https://rch1.com/individuals/who-is-rch) - [Why Does RCH Have My Retirement Savings?](https://rch1.com/individuals/why-does-rch-have-my-retirement-funds) - 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Most 401(k) plan sponsors simply accepted the solution offered through their recordkeeper or TPA. Others performed due diligence, using a limited set of criteria including basic fees, investment options and accountholder service. Few, however, considered the [grim realities facing terminated participants forced out into safe harbor IRAs](https://rch1.com/blog/bringing-sunlight-to-the-dark-corners-of-safe-harbor-ira-fees), including excessive cashouts, forgotten accounts, hidden fees, and barriers to exit. Now, the game has changed for automatic rollover IRAs: - [Auto portability](https://rch1.com/auto-portability) is making plan-to-plan portability the default option, eliminating the “dead-end” safe harbor IRA - Research demonstrates the value of education & assistance in lowering cashout leakage and improving participant outcomes - The presence of excessive cashouts, fees and barriers to exit can no longer be considered “fiduciary-friendly” Considering these new realities, there are [five new automatic rollover IRA criteria](https://rch1.com/automatic-rollover-checklist) that plan sponsors should consider incorporating.   **#1: Support for Portability** An automatic rollover IRA provider should: - Support auto portability - Have a dedicated team of consolidation specialists for on-request portability - Support all portability options, including: - To current plan - To existing or new IRA - To an annuity **#2: Fee Transparency and Conflicts of Interest** An automatic rollover IRA provider should: - Offer pay-as-you-go monthly, vs. annual, up-front account fees - Have no hidden or “miscellaneous” fees - Have no excessive management fees (ex. – 350 bps) for default investment funds - Provide complete transparency regarding any revenue share payments to third parties - Put all fees and third-party relationships in writing **#3: No Barriers to Exit for Accountholders** An automatic rollover IRA provider should: - Assist, not impede consolidation of savings - Have no investment fund lockups - Have no requirement for signature guarantees - Offer expert support for consolidation, vs. all consolidation performed on a “DIY” basis **#4: Provision of Full Program Results** An automatic rollover IRA provider should: - Provide transparent historical and ongoing reporting on: - Automatic rollover IRA cashout rates (should be <25%) - Consolidations performed, by destination (current plan, existing IRA, new IRA, annuity) - Average or median safe harbor IRA account duration **#5: Commitment to Ongoing Account Servicing** An automatic rollover IRA provider should: - Have a commitment to ongoing account servicing - Provider should not have a record of periodically “selling” tranches of safe harbor IRA accounts to other IRA service providers, where previous commitments are broken after the accounts are transferred **The Bottom Line** With the advent of auto portability and other important features, the game has changed for automatic rollover IRAs, making it incumbent upon plan sponsors to fundamentally “re-think” these programs. By incorporating these five new criteria, plan sponsors can ensure that their automatic rollover IRA programs are fiduciary-friendly, while dramatically improving participants’ retirement outcomes. 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