Electronic records searching, plus an algorithm, pair terminated accounts with employees who moved on without them
Newswire: March 2, 2018.
Abandoned 401(k) accounts or “missing” owners are a growing and vexatious problem for benefits managers, especially for a mobile and transient workforce that is increasingly auto-enrolled in benefits plans. A solution called “auto-locate” is working to match active accounts’ electronic records with terminated or inactive ones in order to properly hand off benefits to those who own them.
Writing in Employee Benefit News, Spencer Williams, the chief executive of Retirement Clearinghouse, said as many as two thirds of terminated or inactive benefit accounts can be found by matching active account records against inactive ones.
Williams said the technology at work in pairing old accounts with their owners is “fully automated, highly secure and in service today.” The technology got a boost in July 2017 thanks to a large plan sponsor in the healthcare industry, which implemented auto-portability, which resulted “in the industry’s first fully automated, end-to-end transfer of retirement savings from a safe harbor IRA into a participant’s active account,” Williams wrote.
Auto-portability has a location function that searches electronic records and identifies multiple accounts that could belong to the same person, then matches them with an algorithm to confirm that the plan participants are indeed the same person.
While auto-locate technologies won’t find every missing participant, it can still go a long way toward addressing an ongoing problem in the benefits management sector, in a cost effective way, Williams says.
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