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.
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.
Much has been written in the media, including this column, about the increase in mobility of today’s American workforce.
Fifteen years ago, when safe-harbor IRAs were first proposed as a destination for small, stranded 401(k) accounts that can be automatically rolled out of plans, then-U.S. Assistant Secretary of Labor Ann L. Combs spelled out what these investment vehicles were supposed to accomplish.
401(k) account cash-outs remain a potent threat to Americans’ retirement-readiness and by all accounts the U.S. Department of Labor agrees, having issued its final Prohibited Transaction Exemption (PTE) for auto portability at the end of July.
On July 31st, the U.S. Department of Labor (DOL) released the final Prohibited Transaction Exemption (PTE) to Retirement Clearinghouse (RCH) for the RCH Auto Portability program, completing the regulatory framework and clearing the way for auto portability’s widespread adoption.
This new development represents an important milestone on the path to auto portability, a private-sector innovation that will help prevent 401(k) cashout leakage, increase plan efficiencies and improve the prospects of a timely, comfortable and secure retirement for millions of Americans.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, passed by the House of Representatives on May 23, has the potential to make a positive impact on Americans’ retirement readiness. One of the bill’s key provisions involves removing restrictions on open multiple employer plans (MEPs), which would make it less costly for small businesses to offer retirement savings plans to employees.
- 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.