Vanguard Group becomes second domino to fall in 401(k) recordkeeper detente on plan portability, and the push is on to cajole Fidelity, the DC king, to follow suit

The $8 trillion Malvern, Pa., asset manager signed a deal with Retirement Clearinghouse to address its $1.8 billion of record-kept plan assets, which suffer universally despised pension 'leakage' that drains minority-held accounts.

Author Lisa Shidler September 24, 2021 at 1:21 AM

1 Comment

Robert Johnson: “Our industry must safeguard against retirement plan leakage, which particularly affects black and brown workers.

401(k) Stories

Fidelity Investments

The Vanguard Group

Colleen

September 25, 2021 — 3:49 PM

I agree that cashing out accounts is a huge problem for saving for retirement (see also the never ending loan cycle for some participants). However, the onus on rolling over money to an IRA is not on the participant from $1,000 to $5,000, but on the employer. The employer must establish an IRA for the participant. The issue here is that these tiny balances aren't necessarily tracked by the participant, and there can be tiny balances all over the place. The idea here seems to be from preventing multiple accounts going all over the place. Really you want participants to not look at their money as an insignificant amount and just leave it in place. And build up accounts quicker, encouraging employers to use auto enrollment and auto escalation, which would mean employees would have to opt out rather than opt-in. Also, really stress the tax consequences of an early withdrawal.

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Vanguard Group becomes second domino to fall in 401(k) recordkeeper detente on plan portability, and the push is on to cajole Fidelity, the DC king, to follow suit

Colleen

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March 25, 2023 at 1:32 AM

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November 3, 2022 at 1:59 AM

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