*Bet Founder Bob Johnson has teamed with three of the largest 401(k) record keepers to help improve retirement outcomes for Black American workers over a generation by eliminating early cash-outs of 401(k) funds, per a news release.
Retirement Clearinghouse, LLC (RCH), an RLJ Company, Fidelity Investments, Vanguard, and Alight Solutions announced that they have collaborated to create a consortium of workplace retirement plan recordkeepers, Portability Services Network, LLC, to accelerate the nationwide adoption of auto portability to help America’s under-served and under-saved workers improve their retirement outcomes, according to the press release.
As reported by Black Enterprise, the groundbreaking endeavor marks the first time that “a Black company and white companies have combined for the sole purpose of improving financial security and aimed to prevent individuals from cashing out of 401(k) accounts early,” the outlet writes.
The goal of the consortium is to save $619 billion in retirement income for Black American workers over a generation.
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— Bob Johnson (@RLJOfficial) June 2, 2020
Johnson said, “For many years, I have been focused on finding business solutions to addressing the significant wealth gap facing minorities, and I am delighted to see the leaders in the retirement services industry come together with my company, RCH, to accelerate the nationwide adoption of auto portability as part of our vision for helping under-served and under-saved Americans achieve financial security. This is truly a historic moment for the industry, as well as our country and is the first step to reduce the wealth gap between Black and white households in this country. I urge Black organizations, Black elected officials, and the Black community to contact their workplace benefits office and 401(k) record keeper companies to encourage them to fully adopt 401(k) auto portability.”
The plan makes it simpler for American workers to transfer their 401(k), 401(a), 403(b), and 457 account balances from plan to plan when workers change jobs. According to the news release, this process will help mitigate cash-out leakage and preserve trillions of dollars in savings in the U.S. retirement system, particularly benefiting minorities, women, and low-income workers.
The consortium currently represents approximately 43.8 million workers across more than 48,000 employer-sponsored retirement plans, based on data published by Pensions & Investments, per the news release.
“As a leader in the workplace benefits industry, Fidelity is committed to improving the private retirement system to benefit all American workers,” said Kevin Barry, President of the Workplace Investing Division at Fidelity Investments. “We are excited about the opportunity to work with RCH and other leaders in our industry to focus squarely on ‘connecting and protecting’ workers’ retirement savings, thereby improving retirement outcomes, particularly those for under-served and under-saved workers.”
“We were honored to be the first 401(k) plan recordkeeper to implement auto portability for our clients,” said Alison Borland, Executive Vice President of Wealth Solutions at Alight. “Two years later, industry awareness and the momentum behind this vital solution have grown significantly, and we look forward to working with our fellow industry leaders to reduce our country’s retirement-savings shortfall.”
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