Consolidation Corner

Changing Jobs in 2017? Take Your Retirement Savings With You

Posted by Neal Ringquist on Jan 3, 2017 11:41:39 AM


In his latest article in MarketWatch, posted on New Year’s Eve, RCH President, CEO and RetireMentor Spencer Williams counsels those who switched jobs in 2016 to make their New Year’s resolutions to roll-in all of their retirement savings accounts – not just the account in their most recent prior-employer plan – into their new-employer plan.


For any account that’s not yet rolled in to a current-employer plan, Williams strongly urges that savers update their current contact details.

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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Roll-In, Participant transition management, assisted roll-in

Miracle on Retirement Street

Posted by Neal Ringquist on Dec 6, 2016 12:31:28 PM


In his latest article in MarketWatch, RetireMentor and RCH CEO Spencer Williams gets us into the festive, holiday spirit by showcasing the “miracle” of compound interest. Compound interest is particularly relevant to retirement savers, whose nest eggs will incubate over a career. 

Thus, any withdrawal of retirement savings – particularly cashouts that are made early in a career – can rob savers of thousands of dollars at retirement age. Less well-known, but still damaging, are the accounts that are left stranded and dinged every year by fees. 

Williams’ two examples tell the compound interest tale.  In his first example, Williams demonstrates that a 30-year old saver cashing out a $5,000 401(k) account will lose almost $52,000 in compound interest savings by age 65. In Williams’ second example, our 30-year old doesn’t cash out, but leaves his savings stranded at his previous employer, where he’ll pay an additional $2,052 in fees, which, on a compounded basis, translates to a whopping $8,488 in lost savings at age 65.

Bottom line, retirement savers should consolidate their qualified retirement savings accounts to their current employers, whenever they switch jobs. 

Consolidation allows retirement savers to enjoy the gift that keeps on giving: compound interest.

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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Roll-In, Participant transition management, assisted roll-in

A Roll-In in Time Saves Far More Than Nine

Posted by Neal Ringquist on Nov 7, 2016 8:15:00 AM


In his latest MarketWatch RetireMentors column, RCH CEO Spencer Williams modifies the familiar proverb “a stitch in time saves nine” for the benefit of 401(k) savers who have multiple retirement savings accounts. A roll-in becomes the equivalent of the stitch, saving participants considerable time and money as they change jobs.

As the original proverb suggests, Williams argues that savers are much better-off consolidating their balances at each job change, vs. waiting until retirement to do so.

Williams backs up his advice with plenty of facts. 

The Employee Benefit Research Institute (EBRI) estimates that the average American will change jobs over seven times in a 40-year career. Using figures obtained from a study of mobile workforce behaviors, Williams calculates that waiting to perform seven roll-ins at retirement age would take between 35 and 42 weeks of effort. 

To make matters worse, unconsolidated accounts lose a substantial amount in fees and compounded interest. For example, an account stranded at age 30 would lose an estimated $6,708.54 in fees and compounded interest by age 65.  

Finally, applying the “time is money” theory, Williams asserts that $100 to $500 of personal time spent rolling in balances now is much better than spending $700 to $3500 at age 65.

In addition to their virtues of saving time and money, roll-ins reduce the risk of losing your savings. Savers who’ve stranded accounts with less than $5,000 may be subject to being forced out of their plan and into a safe-harbor IRA, or worse – find themselves facing an involuntary cash-out if their balance is less than $1,000. 

With one in six Americans relocating in any given year, the chances of these small, stranded accounts “going missing” can skyrocket.

As Williams so aptly demonstrates, a “roll-in in time” will save you far more than nine when you’re ready to retire.

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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Roll-In, Participant transition management, assisted roll-in

How You Should Observe ‘National Save for Retirement Week’

Posted by Neal Ringquist on Oct 5, 2016 12:48:33 PM


In his most recent article in MarketWatch, RCH’s Spencer Williams notes the upcoming ‘National Save for Retirement Week’ event, and employs some clever word-association that has readers re-thinking the meaning of the word “save.”

As Williams points out, the worst decision an employee can make is not to “save” in the first place.  If they’ve made the right call to participate in their employer’s qualified plan, then the word “save” can take on a whole new meaning at the point they change jobs, when they may need to be rescued from the second-worst decision:  to cash out their retirement savings.


Citing a recent study by EBRI and ICI, Williams notes that consistent participation in a 401(k) plan is closely-linked to higher levels of job tenure.  Thus, if plan participants can avoid cashing out at job change and roll their balances forward, they create “synthetic tenure” – the unbroken, continuous participation in a qualified plan throughout their working career.

When National Save for Retirement Week begins on October 16, remember to “save” your retirement by never cashing out and by always keeping your savings invested in a defined contribution plan.



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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Roll-In, Participant transition management, assisted roll-in

Consolidation: Make the Smart Decision the Easiest Decision

Posted by Neal Ringquist on Sep 13, 2016 8:30:00 AM

“Make the smart decision the easiest decision” seems like an obvious goal for plan sponsors when designing participant-directed retirement plans, and it’s certainly driven the rapid adoption of the autos—auto enrollment, auto deferral escalation, and auto investment options, such as target-date funds and managed accounts.

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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Roll-In, Participant transition management, assisted roll-in

Making Your Day, Re-Visited: When Retirement Savers’ Luck Runs Out

Posted by Neal Ringquist on Sep 7, 2016 2:48:25 PM


In his most recent article in MarketWatch, "Are you still feeling luck, 401(k) saver?" RCH’s Spencer Williams reprises last year’s 7/10/15 article where he channeled Clint Eastwood’s iconic movie hero “Dirty Harry” Callahan. Just like the movie villains whose luck ran out at the hands of Dirty Harry, retirement savers who strand their 401(k) accounts must run a gauntlet of decidedly unlucky outcomes – including involuntary cashouts, automatic rollovers and savings-depleting fees.

Unlike Dirty Harry’s foes, retirement savers have a shot at redemption, by rolling their hard-earned savings in to their next employer’s plan. According to the most recent PSCA annual survey of plan sponsors, almost 98% of plans allow roll-ins from other plans, almost 62% from IRAs. However, for those unfortunates who live dangerously and strand their savings, they can take cold comfort in the knowledge that their former employer could face higher fines for failing to keep their contact details up-to-date. For those savers that stranded accounts with less than a $5,000 balance, this means their former employer has even more motivation to force those accounts out of the plan and into safe harbor IRAs with the savings-depleting combination of high fees and low returns.


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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Roll-In, Participant transition management, assisted roll-in

Brexit Reminds Retirement-Savers Why Account Consolidation is Important

Posted by Neal Ringquist on Aug 2, 2016 4:17:11 PM


In his most recent article in MarketWatch, RCH’s Spencer Williams cites the recent market trauma experienced in the wake of the United Kingdom’s decision to exit the European Union (“Brexit”) as a good reason for retirement-savers to consolidate their accounts.


Defined contribution plans, argues Williams, offer participants an array of tools that help them avoid emotional decisions, including investment advice, “set it and forget it” target-date funds and managed accounts. If participants have rolled their account balances into their new-employer plan when they’ve changed jobs, then their savings will be in a single account, which is easily monitored and protected ahead of, and during Brexit-like volatility.


In addition to avoiding panic during a crisis, consolidated accounts can also minimize the likelihood that participants will succumb to temptation and cash out their savings. The Auto Portability Simulation demonstrates this point in dramatic fashion, showing that auto portability can add more than $100 billion in new retirement savings, due to a nearly two-thirds reduction in cash outs of small-balance (under $5000) accounts.


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Topics: Auto Portability, MarketWatch, 401(k) Consolidation, Retirement Savings Portability, auto portability simulation

When it Comes to Saving for Retirement, Millennials Can Learn from Baby Boomers’ Mistakes

Posted by Neal Ringquist on Jul 1, 2016 8:30:00 AM

In his 6/30/16 MarketWatch article, RCH President and CEO Spencer Williams suggests an inter-generational dialogue on the pitfalls to avoid when saving for retirement.


As the generation whose career has witnessed the emergence and widespread adoption of 401(k) plans, Boomers are uniquely qualified to lend their perspective to Millennials. As Boomers have changed jobs, the specter of the cashing out has loomed largest in their list of regrets.


Sadly, the cashout leakage problem could have been solved by simply providing Boomers with an easier alternative to move their balances forward to their current-employer plans, as they changed jobs.   The good news for Millennials is that the problem of portability friction is being taken up in Washington, DC – including by the White House, a bicameral group of Congress members, as well as the Bipartisan Policy Center. All of these calls share one thing in common: making it easier for current and future generations to move their retirement savings forward at the time of job transition, thus avoiding the scourge of cash outs.


Williams cites results from the Auto Portability Simulation (APS) model that show $115 billion in new retirement savings would be added to the nation’s retirement system, if we only added portability to the equation. And that’s just for savers with less than $5,000!


Millennials can ensure they don’t wind up regretting their actions by learning from the mistakes of their elders, and avoiding the temptation to cash out or leave their accounts behind when changing jobs.   Solutions like Auto Portability can make that choice a lot easier – not only for Millennials, but for every generation.


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Topics: Auto Portability, MarketWatch, Safe Harbor IRA, Automatic Rollovers, Cash Outs, Retirement Plan Portability, Retirement Savings Portability

Advice college graduates won't hear at commencement: ‘Strive for 25’

Posted by Neal Ringquist on Jun 6, 2016 9:21:30 AM

As they set out into the working world, RCH President & CEO Spencer Williams counsels the Class of 2016 on the importance of developing good saving habits from the very beginning.    

Using the phrase ‘Strive for 25’ – Williams notes that the $25,000 retirement savings threshold is a critical milestone that all graduates should target. 


Why $25,000?  A study of mobile workforce behaviors conducted by Boston Research Technologies reported that cash-outs are primarily a function of wealth, not income.  The study clearly demonstrated that those workers who amassed savings of $25,000 were much less-likely to have cashed out.


Williams further observes that the fastest way for graduates to reach $25,000 in retirement savings is to transfer their 401(k) balances to their new employer plan as they move from job to job, as opposed to cashing out or leaving their accounts behind in previous-employer plans.  The practice of consolidation avoids savings-eroding fees, which can take become quite substantial over the course of a 40-year career.


Finally, Williams notes that help may be on the way in the form of auto portability – which can help preserve savings by automatically moving balances forward as workers change jobs.


While this may not be the kind of message typically heard in commencement speeches, it’s sound, practical advice that can pay off handsomely for millions of new graduates!

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Topics: Auto Portability, MarketWatch, Retirement Savings Portability, DIY Roll-In

Saving For Retirement is not a Trivial Pursuit

Posted by Neal Ringquist on Mar 4, 2016 8:05:45 AM


In his March 3rd column in MarketWatch, RCH President & CEO Spencer Williams establishes an important link between the board games we played as children (ex. – Candy Land, Trivial Pursuit and Snakes & Ladders) and the “games” we can play in adulthood, while managing our retirement savings.  The children’s games are harmless, fun and instructive, but the adult retirement games (ex. – Cashing Out, Stranding Accounts, and Not Updating Your Address) are anything but.   


In separate statements, President Obama and Congress have recognized this, both calling for actions that improve retirement savings portability.


With the advent of frictionless plan-to-plan portability, adults will be able to turn the tables and change the game, easily moving their retirement savings board pieces (i.e., multiple retirement savings accounts) to their winning destination -- a current plan.  As portability becomes more widespread (ex. – auto portability), the retirement savings game will only get easier!


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Topics: MarketWatch, 401(k) Consolidation, Managed Portability, Retirement Plan Portability, Retirement Savings Portability

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