Consolidation Corner

The ABCs of Auto Portability

Posted by Thomas Hawkins on Jan 19, 2017 3:53:20 PM



This video presentation is designed to give the viewer a basic understanding of Auto Portability.


What is Auto Portability?

Auto Portability is:

  • The routine, standardized and automated movement of an inactive participant’s retirement account from a former employer’s retirement plan to their active account in a new employer’s plan. 
  • Serves the needs of participants subject to mandatory distribution provisions of their employer-sponsored plan (separated participants with account balances less than $5,000) to curb excessive cash out leakage occurring as participants change jobs.
  • Could be adapted to larger account balances, should public policy dictate a higher mandatory distribution limit.


Why is Auto Portability needed?

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Topics: Auto Portability, Managed Portability, Roll-In, Lifetime Plan Participation, Retirement Savings Portability, Thought Leadership, PSCA, Participant transition management, Video

Celebrating 20 Years of Being WISER!

Posted by Thomas Johnson on Sep 16, 2016 11:15:24 AM


Retirement Clearinghouse and the RLJ Companies congratulate the Women’s Institute for a Secure Retirement (WISER) on their Twentieth Anniversary Celebration and HERO Awards Reception, taking place September 20th, 2016 at 101 Constitution Avenue, NW, Washington, DC. 


WISER helps women, educators and policymakers understand the important issues surrounding women’s retirement income. Led by Cindy Hounsell, President, and an outstanding staff, WISER delivers education and information in easy-to-understand language that explains complex financial issues that women face. WISER has been the driving force behind a series of state and local events on women’s long-term financial security. WISER has significant influence with policymakers at the federal, state and local levels and is highly-regarded and respected in the private sector.


Retirement Clearinghouse and the RLJ Companies have a natural affinity with WISER, sharing a mission to improve Americans’ long-term financial quality of life. We are pleased to support WISER’s efforts.



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Topics: Auto Portability, Cash Outs, Lifetime Plan Participation

The ABCs of Roll-Ins

Posted by Thomas Hawkins on Aug 15, 2016 1:54:28 PM

With the advent of the Department of Labor's Fiduciary Rule, more employers are looking to promote lifetime plan participation and encourage participants to consolidate retirement assets in their current, active 401(k) plan. The plan feature to enable consolidation in the active 401(k) plan is the roll-in contribution. Retirement Clearinghouse is the recognized thought leader in roll-in facilitation.  We have prepared this video - The ABCs of Roll-Ins -- as a resource for plan sponsors who are considering a formal roll-in program, as well as offering a roll-in facilitation service for their plan participants. 

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Topics: Auto Portability, Managed Portability, Roll-In, Lifetime Plan Participation, Retirement Savings Portability, Thought Leadership, PSCA, Participant transition management, Video

The Missing Piece in Retirement Income: Consolidation

Posted by Thomas Hawkins on Apr 14, 2016 8:30:00 AM


Over the span of their working lives, Baby Boomers have witnessed the birth of 401(k) plans as optional, “supplemental” retirement plans, seen the rapid spread of 401(k) plans throughout the U.S. retirement system, and tracked the evolution of the 401(k) plan into the primary – and often, only -- retirement savings plan to be offered by their employers. 


As the first full generation of 401(k) participants begins to retire in record numbers, Boomers have begun to shift gears, focusing on decumulation – the process of converting 401(k) savings into retirement income that will last a lifetime. 


As Boomers begin to sweat decumulation details, many of their employer-plan sponsors are coming to their aid, adopting features that promote lifetime plan participation, not only for Boomers, but for the generations that will follow.  Along with their consultants and recordkeepers, plan sponsors have begun to implement a dizzying array of retirement income solutions that include both in-plan and out-of-plan offerings, encompassing features such as managed drawdowns, guaranteed minimum benefits and so on. 


Let’s be clear: retirement income strategies can be quite complex, as early-adopting plan sponsors have learned.  Optimizing retirement income is a multi-faceted problem, considering an array of potential variables, including assets, life expectancy, market risk, inflation, taxes, health care costs, etc.     


What’s Missing in the Rush to Replicate Salary in Retirement?

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Topics: Retirement Savings Consolidation, Managed Portability, Plan Portability, Roll-In, Lifetime Plan Participation, Retirement Plan Portability, Retirement Income

Tales from the Roll-In Front Lines, Part I

Posted by Thomas Hawkins on Jan 26, 2016 3:44:35 PM


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.


Unfortunately, there are many pitfalls to performing do-it-yourself roll-ins. For those hardy souls willing to undertake the process themselves, DIY roll-ins can often turn into an ordeal they’d not bargained for.


Consequently, the 98% of employers with defined contribution plans that allow roll-ins (source: PSCA 57th Annual Survey of Profit Sharing and 401(k) Plans) should fully-understand these complexities and strongly consider the use of a facilitated roll-in service, which makes the process easy & worry-free for their participants. 


There’s no better way to illustrate the benefits of a facilitated roll-in service than with a real-world example.


John’s Story


John (not his real name) is a 42 year-old employee of a large healthcare organization, with four unconsolidated individual retirement accounts, all held with the same large financial institution. Upon his hire, John learned that his company’s 401(k) plan supported roll-ins, so he decided to roll his IRA balances into his company’s 401(k) plan, saving time and money, and simplifying his retirement planning.


Brimming with confidence, John elected to initiate four roll-in transactions himself.


Things quickly began to go wrong.


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Topics: Retirement Savings Consolidation, Managed Portability, Plan Portability, Roll-In, Lifetime Plan Participation, Retirement Plan Portability

Four New Year’s Resolutions for Retirement Savers Summary

Posted by Neal Ringquist on Jan 20, 2016 3:52:18 PM


In his 1/20/16 MarketWatch column (Four New Year’s Resolutions for Retirement Savers), Retirement Clearinghouse CEO Spencer Williams offers four New Year’s resolutions that all 2016 job-changers should take to heart, including:


  1. Don’t cash out, or leave behind, your 401(k)—Roll it into your current plan
  2. Make sure plan record-keepers have your up-to-date address on file
  3. Don’t throw away annual reports and statements!
  4. If you plan to retire in 2016, do all of the above ASAP


This is particularly important advice, argues Williams, given the fact that so many job-changers a) cash out their retirement savings, or b) leave their accounts “stranded” in a previous employer’s plan. 

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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Roll-In, Lifetime Plan Participation, Retirement Plan Portability

Auto Enrollment: The Unintended Consequences, Part II

Posted by Thomas Hawkins on Jan 4, 2016 11:35:57 AM


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. 


Expanding on Williams’ analysis a bit, could we also expect to find a link between auto enrollment and greater numbers of separated participants?  It seems plausible: auto enrollment increases plan participation levels (a good thing), and if workforce mobility remains constant, then we’d expect to see rising levels of separated participants (a not-so-good thing).


Why should that matter?  A proliferation of separated participants drives increased plan costs, leads to higher levels of cash-outs and leakage, along with more missing participants and stranded, unconsolidated accounts.  Consequently, some plans may say “no thanks” and avoid auto enrollment altogether, despite its many favorable attributes.


So we looked deeper into the data, and that’s exactly what we found in one industry that we examined.  


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Topics: Auto Portability, Automatic Rollovers, Managed Portability, Roll-In, Lifetime Plan Participation, Auto Enrollment

The checklist you need to manage multiple retirement accounts

Posted by Neal Ringquist on Dec 16, 2015 4:13:59 PM

Marketwatch Logo

In his December 16th, 2015 article in MarketWatch, RCH’s CEO Spencer Williams offers a year-end checklist for those retirement savers who’ve elected to leave qualified retirement savings accounts behind with their former employers.


Williams maintains that multi-account retirement savers must maintain a level of vigilance to ensure that they keep tabs on these accounts, including:

  1. Monitoring merger and acquisition activity, which can lead to plan consolidation and significant changes to plan features.
  2. Determining if there are any other major plan changes (ex. – new recordkeeper, new fees, new investments, etc.)
  3. Ensuring that annual reports are still being mailed & received at your present address.  These reports should be reviewed to ensure that there are no significant changes.


If the list above sounds onerous, then you should consider consolidating your old accounts into your current employer’s plan.  The all-too-common assumption that most people make – that it’s easier just to leave these accounts behind – is often false!


Read the MarketWatch article here.

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Topics: Auto Portability, MarketWatch, Cash Outs, Lifetime Plan Participation, Auto Enrollment

As 401(k) Cash Out Leakage Grows, So Does Need for Auto Portability

Posted by Neal Ringquist on Dec 15, 2015 11:32:38 AM

In his December 11th article in BenefitsPro (Addressing the Critical Problem of 401(k) Cash Outs), Nick Thornton draws much-needed attention to the magnitude of the 401(k) cash out leakage issue, due to the frictions associated with account portability when plan participants switch jobs. Thornton’s article rightly emphasizes the need for automated portability – similar to automatic enrollment and deferral increases - to effectively address the cash out problem. 


Let’s examine the leakage problem in more detail.

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Topics: Auto Portability, Cash Outs, Lifetime Plan Participation, Leakage, America's Mobile Workforce, Auto Enrollment, Boston Research Technologies

When Small Accounts Are a Big Problem: What Every Plan Sponsor Should Know

Posted by Thomas Hawkins on Oct 12, 2015 3:50:02 PM

Plan sponsors intuitively know that a proliferation of small-balance 401(k) accounts can create problems.  But few sponsors are clear on the factors that give rise to small accounts, and fewer still understand how they can utilize portability programs to solve the problem.  


This article provides plan sponsors with a high-level framework to understand and address the small account problem, including its causes, effects and solutions.


The Key Causes of Small Accounts

Individually, the factors identified below can drive high levels of small accounts.  When combined, these factors can turn small accounts into big problems for plan sponsors.

  • Mobile Workforce: The propensity of the American worker to frequently change jobs – currently estimated to occur over seven (7) times in an average career.
  • Business Growth: Growth, whether by diversification, organic growth, or by acquisition will increase the base number of participants, and tend to increase the incidence of small accounts.
  • Employee Turnover: Certain industries traditionally experience high levels of employee turnover (ex. – retail, health care, food service). This turnover directly drives higher percentages of separated participants in plan, many who leave behind small balances.
  • Auto-Enrollment: Plans that utilize an auto-enrollment feature will enjoy higher participation levels, but will also experience a larger number of small-balance accounts.


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Topics: Auto Portability, Safe Harbor IRA, Automatic Rollovers, Managed Portability, Plan Portability, Roll-In, Lifetime Plan Participation

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