Arriving with little fanfare, a recent study prepared by the Staff of the Joint Committee on Taxation, a nonpartisan committee of the United States Congress, confirms the findings of earlier research on cashout leakage – namely, that cashout leakage is a big problem, is driven by job changing, and is exacerbated by "forced distributions and [a lack of] portability of plans.”

The case for auto portability, the new 401(k) plan default feature that automatically transfers small-balance retirement savings when participants change jobs, has always been strong. Now, with the April 22^nd release of EBRI’s 31^st Annual Retirement Confidence Survey (RCS), the case has grown stronger.
 

America’s 401(k) system, long plagued by friction, produces $92.4 billion of excessive cash-out leakage annually.   In recent years and culminating in 2021, the private sector has finally “cracked the code” and is delivering innovative fintech solutions, combined with education and personal assistance to reduce friction and to enable true 401(k) portability.

When research performed 8 years ago reveals that your 401(k) plan, by turning on portability and consolidation for all participants, has halved cashout leakage and dramatically reduced its small account problem, what do you do for an encore?

401(k) Plan Sponsors: How would you like to radically boost your participants’ financial wellness, increase your plan’s assets, reduce your plan’s costs, and prevent missing participants?

Adopting this one simple and proven trick – retirement savings portability – delivers all this and more!

The problem of missing participants in employer-sponsored retirement plans is one of the most important, yet perplexing issues facing plan sponsors, and for good reason.

Ensuring that participants (or their beneficiaries) receive their benefits is the essence of an employer’s fiduciary responsibility – and missing or unresponsive participants who become separated from those benefits can generate significant risks for plan fiduciaries.

You don’t need me to remind you that 2020 has been an extraordinary year that many of us would like to forget. The New Year we have been looking forward to for some time is now here.

401(k) plan sponsors know all too well that sunlight – coming in the form of transparent fees and disclosures – is vital to fulfilling their fiduciary duty to act in the best interest of their participants.

No, this article isn’t about the Presidential election. But this year’s election, which took place in the middle of a global pandemic, reminds us that some things are in our control, and some things aren’t. 

On Wednesday, 11/4/20 the Broadcast Retirement Network’s Jeff Snyder interviewed Retirement Clearinghouse (RCH) President & CEO Spencer Williams and Alight Solutions’ Vice President & Head of Research Rob Austin to address the 401(k) system’s small account problem – where high levels of cashout leakage in small balance segments perennially robs millions of participants of a timely or comfortable retirement.