Final Exemption Completes Regulatory Framework for Auto Portability

CHARLOTTE, N.C., July 31, 2019 /PRNewswire/ -- Retirement Clearinghouse (RCH) welcomes the release of the U.S. Department of Labor's (DOL) final Prohibited Transaction Exemption (PTE) for auto portability.

"The Department of Labor's final guidance for auto portability is a crucial step towards closing a gaping hole in the infrastructure of the U.S. retirement system," said Robert L. Johnson, Founder and Chairman of The RLJ Companies and majority owner of Retirement Clearinghouse. "The issuance of the final exemption is a milestone in the years-long sponsorship and innovative initiative by Retirement Clearinghouse, and it is an exceptional example of how policymakers in Washington, D.C. can facilitate a private sector innovation that will produce benefits for millions of workers, especially the acutely under-saved segments of America's minority population."

In tandem with the Advisory Opinion on auto portability issued by the DOL in November 2018?which  identifies RCH as the fiduciary when a participant's small-balance terminated account or safe-harbor IRA are automatically rolled into a participant's current employer plan?the final PTE completes the regulatory framework for auto portability.

During the comment period after the proposed PTE was issued, published comments from industry trade groups regarding auto portability were overwhelmingly positive. Jan Jacobson, Senior Counsel for Retirement Policy at the American Benefits Council, best captured industry sentiment when she stated: "We believe this is an excellent first step in helping ensure that retirement plan assets follow the terminating employee to their new employer and/or reunite lost benefits with the participant. The latter could have a significant effect on the missing participants' problem."

"Defined contribution plan sponsors across the country now have the established guardrails they need to safely adopt auto portability," said Spencer Williams, Founder, President, and CEO of Retirement Clearinghouse. "The regulatory framework established by the auto portability advisory opinion and the final exemption provide legal protections for plan sponsors to help small-balance participants preserve their retirement savings by enhancing their plan services to include auto portability as their new default process when these participants change jobs."

Auto portability (https://www.rch1.com/auto-portability) is the routine, standardized, and automated movement of a retirement plan participant's 401(k) savings account from their former employer's plan to an active account in their current employer's plan. According to the Auto Portability Simulation developed by RCH, cash-outs of small accounts could be cut by two-thirds under a scenario where auto portability is broadly adopted and remains in force for a generation?and $784 billion in retirement savings would be preserved.

RCH remains the only independent provider that defines its primary business as the consolidation of retirement savings into active 401(k) or IRA accounts and provides plans and their participants with services that streamline the seamless transfer of savings between retirement accounts. The RCH Auto Portability service, which automates the consolidation process for small accounts, has been in operation since 2017. On behalf of a large plan sponsor in the health services sector, RCH completed the first-ever fully automated, end-to-end transfer of retirement savings from a safe-harbor IRA into a participant's active account in July 2017. To learn more about RCH's suite of portability services, please visit: https://rch1.com/plan-sponsors/rch-portability-services

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, record-keepers 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.

Retirement Clearinghouse's portability solutions have been proven to cut cash-outs by over 50% and significantly increase average account balances. The firm's portability solutions include a domestic call center providing specialized assistance designed to enable end-to-end portability and account consolidation; uncashed check services; and the capability to search for lost and missing participants.

Originally established as RolloverSystems in 2001, Charlotte, N.C.-based Retirement Clearinghouse works with more than 26,000 retirement plans and has helped guide over 1.4 million plan participants with more than $20 billion in retirement savings. Retirement Clearinghouse is a portfolio company of The RLJ Companies, founded by Robert L. Johnson. For more information, please visit www.rch1.com.

Media Contact:         
Laura Simpson
JConnelly for Retirement Clearinghouse
(973) 850-7319
[email protected]  

SOURCE Retirement Clearinghouse