Are Plan Sponsors Jumping on the Auto Portability Train?

This quarter sponsored by: Nuveen, a TIAA company

Several years ago, Retirement Clearinghouse (RCH) created a platform for automatically rolling over plan assets from one employer to another when a participant changes jobs. In 2019 they received DOL guidance allowing participants to be automatically enrolled in the program and SECURE 2.0 codified that guidance, allowing the automatic rollover of assets without participant consent/action. Last year RCH announced the formation of Portability Services Network – a consortium of plan providers that would work together to automatically rollover plan assets from a participant’s 401(k) account to that of their new employer. That platform is now live – participating providers include Fidelity, Vanguard Group, Alight Solutions, Empower, TIAA, and Principal Financial Group.

Two years ago we asked plan sponsors their thoughts on auto portability and if it was something they were interested in – at that time, 80 percent of respondents had never heard of it. This week we asked plan sponsors their thoughts on the new network and if they will participate. Eighteen percent are participating or planning to, while 20 percent indicated their provider is not part of the network, and more than a third of respondents are interested but need to know more. Comments follow.

Participating or Planning to:

• I'm interested in seeing what the communication to the participant will be – specifically how clear it is spelled out as to what the process will be if they take no distribution.
• We will participate in the network ASAP.
• Yes, we have already notified our Managing Director that we intend to do this.  I think what many people don't understand is that this is for low balance termed participant accounts (<$5,000.00 to now $7,000.00) distributions only.
• I didn't know this was up and running...
• I think it's always great to automate as much as possible to save time, money and ensure accuracy. However, I think we need to be sure the process is perfected. Future enhancements no doubt will make this a viable option.
• This is the first I'm learning about it but it looks like our recordkeeper offers it and I'm very interested in learning more.
   

Not participating or unsure:

• Not looking to automate at this time.
• Never of heard of this until now.
• Our recordkeeper has not mentioned this to us.
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My recordkeeper isn't part of this network so we can't.

• I think it is a great idea
• I'm curious to see how the network works. We've expressed interest to our recordkeeper, who is currently not affiliated with the network, though would like to see some results before joining.
• If my record keeper joins the network, we would evaluate the option.
• We would love this option if our recordkeeper offers this in the future.

Need to know more.

• At face value, I like the idea but would like to hear more about it to see if there would be a con to doing so.
• I love the concept, and it would certainly help prevent "lost" participants.  I'm hoping our recordkeeper is one of them.
• Interesting concept. I would need to know more before moving ahead with this feature.
• It sounds like a good idea but I would like to know more about it before making a decision
• Like the idea but would need to know more.
• Our recordkeeper is in the network but we haven't heard much about the process. I plan on reaching out to our recordkeeper for additional information.
• The article mentions a $30 fee from the clearinghouse. I am assuming that is in addition to the fee to that might be imposed by the current plan when moving/liquidating funds?
• We are always excited about new ways to help our participants keep up with their retirement accounts, but we need to fully understand the program and how it works before jumping in.
• We have no plans as of now to do this due to significant projects already underway.
• While this is absolutely a great idea, we would need to know when & how participants are notified of auto-portability and the options available to them. What is the threshold for auto-portability? Would also need to know if such a capability is approved by ERISA regulations for plans to adopt as a provision.