Retirement Plan Portability (4)
Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
Let’s Extend the Spirit of the CARES Act to Automatic Rollover IRAs
America is a fundamentally caring country, as reflected in the collective actions of its individuals, businesses and policymakers. In the midst of the COVID-19 crisis, no policy reflects this caring spirit more than the aptly-named CARES Act, which, among other things, temporarily allows retirement savers hard-hit by the COVID-19 crisis to tap their qualified retirement savings while avoiding the punitive, 10% early-withdrawal penalty.
How Does Auto Portability Work? Watch the Video.
Looking for a quick primer on how auto portability works? Watch the video below, which walks you through the four-step process, including:
1. Worker changes jobs
2. Locate new worker's account
3. Match data
4. Savings follow worker
New Research Confirms Clear Shift Towards Plan-to-Plan Portability
Increasingly, 401(k) plans have become more-and-more “institutionalized” – reflected by an increased level of sophistication in investment options, coupled with a downward trend in fees.
Video: Is Auto Portability the Next 401(k) ‘ESG’ Initiative?
Three recent developments indicate that the retirement industry is waking up to the need to address 401(k) cashout leakage, and importantly – from within the framework of corporate social responsibility.
How Socially Responsible Corporations Will Solve the 401(k) Cashout Crisis
Every year a silent, slow-motion train wreck occurs in America’s 401(k) system, when millions of job-changing workers prematurely cash out billions of dollars in retirement savings, a phenomenon known in retirement industry lingo as “cashout leakage."
The New Age of DC Plan Portability
A recent survey of defined contribution (DC) plan sponsors found that interest in retaining assets for retirement is on the rise. That finding, paired with certain provisions of the SECURE Act of 2019, suggests that DC plans are on a path to becoming “decumulation vehicles” for American retirees. While these developments are encouraging, persistently high levels of cashout leakage, increasing missing participants and other factors produce understandable pessimism regarding the future of DC plans.
A Financial Wellness Program You Can Actually Measure
Although the financial wellness of employees has emerged as a top priority for employers in recent years, too many workers are still struggling to improve their financial health.
The Surprising Migratory Patterns of Job-Changing Participants
Much has been written in the media, including this column, about the increase in mobility of today’s American workforce.
The Playbook for Conducting Diligent Missing Participant Searches
Sponsors of active retirement plans are increasingly challenged by the problem of missing participants, and the difficulties they face in performing diligent searches. After all, ensuring that plan participants (or their beneficiaries) receive the benefits they’re owed is a sponsor’s primary fiduciary responsibility.
A Tale of Two 401(k) Balance Segments
It was the best of times, it was the worst of times.
For job-changing 401(k) participants with balances greater than $15,000, it was the spring of financial wellness, as the bulk of their retirement savings would remain intact. For less-aristocratic 401(k) savers with balances below $15,000, it was the winter of despair, as most of their savings would be lost on the cashout chopping block or forcibly exiled to a safe harbor IRA, where more savings would perish.