Vanguard today announced an expanded collaboration with Retirement Clearinghouse (RCH) that will reconnect IRA accountholders with retirement funds they may have lost or forgotten.
The consolidation of these accounts, which are often left behind when employees change jobs, will help IRA accountholders preserve and maximize retirement assets, Valley Forge, Pa.-based recordkeeper Vanguard said in a July 28 statement.
The initiative extends the existing relationship with RCH, which launched in 2021, as the two companies have collaborated to prepare an auto-portability service to 401(k) plan sponsors and their participants.
Retirement accounts are sometimes left behind during a career transition or when a saver mistakenly feels an account is too small to be impactful toward their retirement goals. This can lead savers to miss out on value from the money they have already set aside. Consolidating these funds can make it easier to keep track of retirement savings and tap the power of long-term investment returns, ultimately putting savers on their best path to investment success.
Vanguard has a long history of working with mission-aligned firms that ultimately help to improve investor outcomes.
“Vanguard is dedicated to continuously supporting retirement savers as they seek to achieve financial well-being. We have identified a population of IRA accountholders who may have lost track of their retirement funds, which can occur when employees change jobs,” a Vanguard spokesperson said in a statement to 401(k) Specialist Friday. “We are proactively engaging these IRA accountholders to reconnect them with these funds. As needed, Vanguard will transfer the IRA account to Retirement Clearinghouse, LLC, a leading provider of consolidation services, which helps to reunite and ultimately preserve retirement assets.”
Agreement in addition to PSN cooperation
Today’s announcement made no specific mention to Vanguard and RCH’s involvement in founding the Portability Services Network (PSN) in October 2022 along with Fidelity Investments and Alight Solutions. The consortium of retirement plan service providers is focused on helping America’s under-served and under-saved workers improve their retirement outcomes by making it easier to transfer their workplace retirement accounts when changing employers.
Since October, PSN has added Empower, TIAA and earlier this month added Principal. The consortium currently represents approximately 82 million workers across more than 185,000 employer-sponsored retirement plans. As the latest owning member to join PSN, Principal adds approximately 11 million retirement plan participants and more than 46,000 plans to the coalition.
Approximately $92 billion in savings leaves the U.S. retirement system every year because Americans who switch jobs prematurely cash out their workplace retirement accounts and pay taxes and penalties on those cashouts, according to the Employee Benefit Research Institute (EBRI). PSN aims to alleviate this problem.
SEE ALSO:
• 401k Auto-Portability Takes ‘Giant Leap Forward’ with Vanguard, RCH Deal
• Principal Becomes 6th Recordkeeper to Join Portability Services Network
• Auto Portability’s Big Move: Major Recordkeepers Form Consortium with RCH
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
