RCH and PSN consolidate 401(k) savings for workers changing jobs
Updated
Updated · The Washington Post · May 2
RCH and PSN consolidate 401(k) savings for workers changing jobs
1 articles · Updated · The Washington Post · May 2
Since early 2024, they have transferred $49m for more than 36,000 workers, with over 22,000 employers enrolled and automatic portability available to more than 6 million workers.
The service moves small balances from former employers into new workplace plans, aiming to reduce cash-outs that trigger taxes, penalties and lost investment growth, especially among low-wage and minority workers.
Under Secure 2.0, employers can force out accounts of $7,000 or less, and EBRI estimated cash-outs drained $92.4bn in 2015 alone; backers say wider adoption could preserve far more retirement wealth.
Could automating 401(k) transfers inadvertently trap workers' savings in high-fee plans?
Does saving retirement funds solve the emergencies that force workers to cash out?
As millions of 401(k)s are linked, how is this new hub protected from cyberattacks?
The $20 Billion Solution: PSN’s Auto Portability Revolutionizing Retirement Security for Millions
Overview
Launched on November 7, 2023, the Portability Services Network (PSN), led by Robert L. Johnson and a coalition of major recordkeepers, introduced the nation's first digital auto portability solution connecting 82 million employees across 185,000 retirement plans. This service automatically transfers small 401(k) accounts when workers change jobs, preventing costly cash-outs and abandoned IRAs, especially benefiting lower-income, minority, and female workers. Enabled by the SECURE Act 2.0’s raised $7,000 rollover threshold, PSN’s rapid adoption preserves retirement savings and safeguards federal programs like the upcoming Saver’s Match. To overcome system fragmentation and support millions of job changes annually, a centralized digital clearinghouse is proposed to ensure seamless, secure account transfers and long-term retirement security.