Safe Harbor IRA Providers Have Been Responsive to Government Suggestions | Custodian - Millennium Trust Company

Safe Harbor IRA Providers Have Been Responsive to Government Suggestions

September 20, 2018
By Terry Dunne

As Automatic Rollover IRAs became more prevalent, IRA providers began working with the government to ensure best practices were being followed. We recently wrote a white paper detailing the history of automatic rollovers, current trends, and their future outlook. This is the fourth in a series of five sneak peaks from the new white paper, Automatic Rollover IRAs: From Legislative Footnote to Fiduciary Best Practice.

The Government Accountability Office (GAO) took a closer look at what happens to the savings of participants whose assets are rolled into Safe Harbor IRAs in 2014. It also assessed the ability of 401(k) plan participants to keep track of their retirement savings and how other countries have addressed similar challenges.

It concluded, “To prevent [automatic rollover] IRA balances from decreasing due to the low returns of the investment options currently permitted under the Department of Labor’s safe harbor regulation, we recommend that the Secretary of Labor expand the investment alternatives available. For example, the [automatic rollover] IRA safe harbor regulations could be revised to include investment options currently under the qualified default investment alternatives regulation applicable to automatic enrollment, and permit [automatic rollover] IRA providers to change the investments for IRAs already established.

To ensure that individuals have access to consolidated online information about their multiple 401(k) plan accounts, we recommend that the Secretary of Labor convene a taskforce to consider establishing a national pension registry.”

Some Safe Harbor IRA providers began offering stable value investment options within automatic rollover IRAs to address the first suggestion. The development of a pension registry to facilitate management of retirement plan savings is part of an ongoing, industry-wide discussion.

Subscribe to our blog or check back next week for the fifth post in this series.

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The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.

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