RCH's Auto Portability System Goes Live
CHARLOTTE, NC, July 25, 2017 -- Retirement Clearinghouse (RCH) has completed the industry's first fully automated, end-to-end transfer of retirement savings from a safe harbor IRA into a participant's active account for a large plan sponsor client in the health services industry.
The key elements of the RCH Auto Portability service include an electronic records "location" search to identify multiple accounts potentially belonging to the same individual; a proprietary "match" algorithm to confirm that the located accounts belong to the same participant; receipt of participant's affirmative consent for the transfer, either electronically or via a representative; and an automated roll-in transaction.
"Defined contribution plan sponsors and their recordkeepers are swamped with the administrative burdens of small accounts from separated participants, such as excess recordkeeping fees, missing participants, and uncashed distribution checks, all of which have exploded since the advent of auto enrollment," said Spencer Williams, President and CEO of Retirement Clearinghouse. "RCH Auto Portability addresses the small account problem through systematic consolidation of retirement savings as participants change jobs, attacking each of these problems at their root cause, which will significantly reduce the incidence of stranded accounts, lost/missing participants, and uncashed checks. We are grateful to our client for launching RCH Auto Portability to demonstrate these benefits, and we look forward to working with recordkeepers and their plan sponsor clients to help increase administrative efficiency and reduce costs."
In this first live instance of RCH Auto Portability, more than 150,000 safe harbor IRA accountholder records were sent to the plan using RCH's file transfer protocols, which have been implemented at the plan's recordkeeper. Among the more than 200,000 active participant accounts in the plan, over 2,800 account holders' records were located and matched. The located and matched records belong to plan participants who have been subject to a mandatory distribution from a prior employer's plan over a period that spanned one week to 10 years ago. In the coming weeks, RCH will seek the affirmative consent of the matched account holders, and for those that respond, will complete an automated roll-in of their savings to the plan.
RCH Auto Portability will be an ongoing service for Retirement Clearinghouse's plan sponsor client. In the coming months, Warren Cormier, CEO of Boston Research Technologies, will be studying and reporting on the impact of RCH Auto Portability on the client's plan and participants, with a focus on how to change participant behavior to maximize preservation of their savings.
Auto portability (https://www.rch1.com/auto-portability) is the routine, standardized, and automated movement of a retirement plan participant's 401k savings from their former employer's plan to an active account in their current employer's plan. Auto portability was conceived and developed by RCH to meet the needs of participants with small account balances that lack access to the portability solutions afforded to larger accounts. The process is designed to work within the existing platforms and data flows of the nation's qualified plan system, and can be facilitated at recordkeepers and plan sponsors across the U.S. through RCH Auto Portability.
The RCH Auto Portability service launched by Retirement Clearinghouse creates the first two nodes in a much-needed network that will ultimately connect all defined contribution plans, through their recordkeepers, to enable low-cost transfers between employers as participants change jobs throughout their working careers. As plans and their recordkeepers adopt the service, these new network nodes will allow an ever-increasing number of job-changers to have their accounts seamlessly follow them from job to job. Recently published research from the Employee Benefit Research Institute has estimated that full-scale auto portability will preserve nearly $2 trillion, measured in today's dollars, in the U.S. retirement system, preserved savings that will greatly enhance the retirement readiness of millions of American workers.
About Retirement Clearinghouse
Retirement Clearinghouse, LLC is the leading provider of portability and consolidation services for defined contribution plans, acting as a trusted, unbiased intermediary between plan sponsors, participants, recordkeepers and other parties. Retirement Clearinghouse's integrated financial technology, data and information solutions facilitate automated consolidation of small, redundant accounts for sponsors to improve plan performance metrics, and enable participants, regardless of account balance, to seamlessly transport their retirement savings through every phase of their careers.
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