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Cashout leakage, a long-standing problem in America’s defined contribution system, is a silent crisis that unnecessarily robs millions of Americans of a comfortable, timely or secure retirement.  Plagued by misunderstanding and neglect, it’s vitally important to understand the problem and to take decisive action to curb it.  The third of a five-part series, this article addresses the magnitude of the 401(k) cashout leakage problem.

Cashout leakage, a long-standing problem in America’s defined contribution system, is a silent crisis that unnecessarily robs millions of Americans of a comfortable, timely or secure retirement.  Plagued by misunderstanding and neglect, it’s vitally important to understand the problem and to take decisive action to curb it.

Cashout leakage, a long-standing problem in America’s defined contribution system, is a silent crisis that unnecessarily robs millions of Americans of a comfortable, timely or secure retirement.  Plagued by misunderstanding and neglect, it’s vitally important to understand the problem and to take decisive action to curb it.

The first of a five-part series, this article addresses the fundamentals of cashout leakage.

Previously:

• In Part 1, I examined the dramatically improved participant outcomes that will result from a program of auto portability.
• In Part 2, I described how auto portability, by enhancing and extending automatic rollover programs, represents an enhanced standard of participant care.
• In Part 3, I presented evidence that the adoption of auto portability could lead to a reduction in plan expenses.
• In Part 4, I addressed how auto portability could enhance 401(k) participants’ financial wellness.

In part 5, my final installment of the series, I explain how auto portability can mitigate retirement-related cybersecurity risks.

• In Part 1, I examined the dramatically improved participant outcomes that will result from a program of auto portability.
• In Part 2, I described how auto portability, by enhancing and extending automatic rollover programs, represents an enhanced standard of participant care.
• In Part 3, I presented evidence that the adoption of auto portability could lead to a reduction in plan expenses. 

In Part 4, I address how auto portability could enhance 401(k) participants’ financial wellness.

On April 16^th, as part of their Strategic Issues Webinar Series, the LIMRA Secure Retirement Institute delivered the webinar Regulatory and Legislative Trends Impacting the U.S. Retirement System.  The LIMRA webinar featured presenter Michael Kreps, Principal, Groom Law Group, and was moderated by Judy Zaiken, Corporate Vice President, LIMRA.

• In Part 1, I examined the dramatically improved participant outcomes that will result from a program of auto portability.
• In Part 2, I described how auto portability, by enhancing and extending automatic rollover programs, represents an enhanced standard of participant care.

In Part 3, I present evidence that the adoption of auto portability could lead to a reduction in plan expenses.

In this series, I identify five key reasons why an auto portability program serves the best interests of plan participants.

Previously, in Part 1, I examined the dramatically improved participant outcomes that will result from a program of auto portability.

In Part 2, I describe how auto portability, by enhancing and extending automatic rollover programs, represents an enhanced standard of care for participants.

Plan sponsors considering the adoption of auto portability must determine that, by participating in the auto portability program, they are acting prudently and solely in the interests of their plan’s participants and beneficiaries.

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.