This Earth Day, We are Reminded to Recycle 401(k) Savings, Instead of Adding to the Landfill of Safe Harbor IRAs On April 22, we will celebrate the 54th annual Earth Day, which gives us the opportunity to celebrate our planet’s natural surroundings and contemplate how we can help preserve them. The advent, and ongoing expansion of recycling programs has enabled our society to reduce our waste—and although there is still quite a long way to go, we have evolved significantly from the post-World War II throwaway culture. Writing in the RCH Consolidation Corner blog, RCH President & CEO Spence ..read more

A More-Enlightened Approach to Uncashed Distribution Checks No retirement plan sponsor likes the idea of dealing with uncashed distribution checks, nor do they wish to draw unwanted regulatory attention or to become embroiled in costly litigation. Unfortunately, many plan sponsors place themselves in precisely that spot, becoming unnecessarily over-burdened with unresolved uncashed checks, while inviting unwanted regulatory scrutiny and/or legal challenges by having flawed uncashed check policies. In his 2/8/24 article in RCH's Consolidation Corner blog, Tom Hawkins lays out a "more-enlightene ..read more

Four Key Findings from the New Auto Portability Simulation Writing in the RCH Consolidation Corner blog, RCH's Tom Hawkins summarizes the four key findings from the firm's Auto Portability Simulation, a discrete event simulation that models the impacts of auto portability over a 40-year period, and are detailed in a new white paper, Revisiting the Auto Portability Simulation: The Impact of the Portability Services Network, SECURE 2.0 and Expanded Access Hawkins contends that the new APS analysis has improved the model’s predictive accuracy by incorporating new parameters that reflect “changing ..read more

Auto Portability: It’s About the Participants Writing in RCH's Consolidation Corner blog, Tom Hawkins reminds readers what auto portability is all about -- improving the retirement security of marginalized defined contribution participants. These participants -- comprised largely of minorities, women, younger and lower-income participants -- not only need auto portability the most, but there's solid evidence that they want it as well. To support his claim, Hawkins cites three highly-regarded surveys that have found a strong participant preference for auto portability and for consolidating smal ..read more

A Perfect Storm is Brewing—But Automated Portability Could Defuse It RCH and PSN President & CEO Spencer Williams, writing in the Consolidation Corner blog, notes that a rising incidence of hardship withdrawals and 401(k) loans – as reported by Bank of America – combined with a pending increase in the account-balance limit for automatic rollovers effective 12/31/23, could create a “perfect storm” for depleting Americans’ retirement savings. “Fortunately,” writes Williams, “sponsors and recordkeepers have access to a solution that can help them clean up their plans without automatically rol ..read more

Focus Shifts to Plan Sponsors as Portability Network Set to Go Live Writing in the Consolidation Corner blog, RCH's Tom Hawkins describes the coming "shift" that will occur when the Portability Services Network (PSN) goes live at the beginning of the fourth quarter of 2023. Describing PSN's network-building achievements to date as "nothing short of phenomenal", Hawkins adds that "integration had proceeded apace" and that "plan sponsors will take center stage as they begin to adopt auto portability and witness its tangible results. " Plan sponsor adoption will accelerate as auto portability dem ..read more

The Future is Brighter for Small-Balance Retirement Accounts RCH's Tom Hawkins, writing in the Consolidation Corner blog, describes the "brighter future" emerging for small-balance retirement savings accounts. Hawkins maintains that these accounts, which he associates with an increased incidence of sub-optimal participant outcomes, will fare much better in the future due to "large-scale, industry-led action on auto portability, and more recently, proactive steps being taken by leading providers to consolidate legacy small-balance IRAs ..read more

The New Urgency for Mitigating 401(k) Account Cash-Outs Findings in a recent study by the Sauder School of Business at the University of British Columbia (UBC) underscore that, despite all of the media articles offering tips for how to save more for retirement, many Americans still make the self-destructive decision to cash out their savings following a job separation. RCH’s Spencer Williams, writing in the RCH Consolidation Corner blog, reminds readers that “there are solutions in place for 401(k) plan sponsors and recordkeepers to help participants avoid the all-too-easy decision to cash out ..read more

The increase in the automatic rollover threshold from $5,000 to $7,000, as provided for in section 304 of the SECURE 2.0 legislation, will become effective for mandatory distributions made after December 31, 2023. What will be the impact of these provisions, if fully embraced by plan sponsors? One thing is certain – on both a one-time and ongoing basis, far more terminated participants will be subject to the automatic rollover provisions of their former-employers’ plans. Writing in the RCH Consolidation Corner blog, Tom Hawkins explores the impact of an increased threshold that, when paired wi ..read more

As Time Passes, The Gains Become Harder RCH's Tom Hawkins, writing in the Consolidation Corner blog, observes that our nearly 45 year-old defined contribution system may face diminishing returns as it tries to generate future growth, and should focus on quality and efficiency as it simultaneously expands access. Using fitness as an analogy, Hawkins offers a "workout plan" for the DC system, including plugging leakage through increased portability and emergency savings, while fostering increased retirement savings consolidation to avoid an explosion in small accounts. When combined with expande ..read more