News

EBN: ​The Institutionalization of Portability is Key to Reducing Cash-Out Leakage

In his latest article in Employee Benefit News, RCH President & CEO Spencer Williams identifies plan-to-plan portability as a vital feature to prevent cash-out leakage. Similar to the progress that's been made over the past decade in reducing plan fees, Williams makes the case that the inevitable "institutionalization" of portability will dramatically reduce cash-out leakage and maximize participants' retained savings. Williams advocates for the adoption of a dual portability model, comprised of auto portability for small balances and a consent-based, concierge service for participants with larger balances.

Data and Dollars: Securing Retirement Plans in the Online Age

Writing in 401kSpecialist, Danielle Andrus examines the issue of securing retirement plans, and turns to RCH expertise on the matter. Andrus quotes RCH EVP Neal Ringquist, who states “the more accounts that are out there in the system, the more accounts an individual has, the more opportunity there is for online access to those accounts." By encouraging new hires to consolidate their accounts, it helps protect participants from "losing data or assets to cybercrime." From an institutional perspective, Ringquist also observes that "the level of due diligence, particularly around information security, has significantly increased in the last five years.”

Extend the Spirit of the CARES Act to Automatic Rollovers

In light of the COVID-19 crisis, RCH's Tom Hawkins examines another burden borne by millions of participants, when they’re furloughed or laid off and become subject to ‘traditional’ automatic rollover IRAs – where they’ll likely face high levels of cashouts, predatory fees and barriers to exit. Now, more than ever, it’s important for sponsors to act and to redress this burden. For sponsors utilizing traditional automatic rollover IRAs, Hawkins urges them to demonstrate their caring through three actions that will help address the problem and will deliver significant societal benefit.

P&I: Preston Rutledge's legacy to include auto portability

Covering breaking news, P&I's Washington, DC reporter Brian Croce informs readers about the pending departure of Preston Rutledge, assistant secretary of labor for the Employee Benefits Security Administration (EBSA). With no official announcement by the DOL, Croce turns to Michael Kreps, a principal at Groom Law Group, for comment. Kreps states in an email that "Preston is a dedicated public servant, and his legacy at the department includes important work on pooled retirement plans and auto portability" with Croce adding that auto portability "has a goal of significantly reducing plan leakage and missing participants."

To show participants you care, help them avoid 401(k) cash outs

As participants affected by the COVID-19 crisis consider whether or not to withdraw retirement savings under provisions of the CARES Act, RCH’s Spencer Williams offers plan sponsors constructive advice for engaging them. Writing in Employee Benefit News, Williams acknowledges the need for millions to have a “financial lifeline” but suggests that sponsors remind participants via email communications and digital content “that their retirement savings should be considered a last resort for meeting emergency expenses, especially during the present crisis.”

Also featured in Employee Benefit Adviser

401k Specialist Magazine Features Auto Portability

Issue 2, 2020 of the 401k Specialist Magazine features an article by RCH's Tom Hawkins. In his piece "The New Age of 401(k) Portability", Hawkins identifies clear, across-the-board indications that America's defined contribution (DC) system is entering a "new age" of plan-to-plan portability. Portability, Hawkins contends, is the "missing ingredient" that, when added to 401(k) plans, will resolve the damaging disconnect between America's highly-mobile workforce and their immobile retirement savings.

Factors to Consider Before Cashing Out a 401(k)

In her 4/13/20 article in US News & World Report "Factors to Consider Before Cashing Out a 401(k)", contributor Rachel Hartman advises readers to think carefully about the long-term repercussions of prematurely cashing out of a 401(k). Hartman quotes RCH's Spencer Pringle, who suggests that participants first think carefully about whether or not the need is for a true financial emergency. If it is, Pringle further suggests that participants identify the amount required to satisfy the emergency, keeping the remaining amount invested for retirement.

CARES Act’s Provisions Are Well-Intentioned but Could Harm Retirement Readiness

Writing in PLANSPONSOR, RCH EVP Neal Ringquist urges plan sponsors to use their power to prevent participants from making huge mistakes during the COVID-19 crisis. Acknowledging that the financial effects of COVID-19 are real, and that emergency access to liquidity is absolutely necessary in financial emergencies, Ringquist argues that "short-term needs shouldn't eclipse long-term goals" and that retirement savings should only be used as a "last resort." Sadly, many participants will fall prey to temptation, and worse -- phony and misleading offers. Sponsors, writes Ringquist, can deploy "resources that educate participants on the damage cash-outs can inflict on their income in retirement." In closing, Ringquist reminds readers that, while the crisis will eventually pass, the "harm to retirement outcomes may be permanent if participants succumb to the temptation to make destructive decisions."