Congress should enact legislation permitting broader auto-portability usage, as well as allowing a federal agency to establish and oversee a dashboard that enables 401(k) plan participants to view information about all of their employer-sponsored retirement plans in one place, according to the U.S. Government Accountability Office.
In a survey of 14 401(k) plan record keepers that handle about 64% of all U.S. active 401(k) participants, GAO found that participants encounter challenges in managing and tracking their accounts as they move from one job to another, the agency noted in a report made public on Feb. 20.
Two-thirds of 401(k) participants would find a comprehensive dashboard, where they can see all of their current and old plan savings in one place, to be a useful resource, GAO's survey found. However, no federal agency has statutory authority to establish one.
GAO also examined how six selected countries — Australia, Belgium, Denmark, the Netherlands, Norway and Sweden — help retirement plan participants manage their savings. All six countries use dashboards and other approaches to help plan participants track, manage and consolidate their plan savings and reduce fees, and, according to the GAO, the U.S. should do the same.
GAO also recommend that Congress permit the Department of Labor and IRS establish an electronic plan-to-plan rollover system that, when an individual changes jobs, automatically transfers the savings from their old employer-sponsored retirement account to their new employer's plan (provided that their new plan accepts rollovers and that individuals can opt-out).
When it comes to small account balances, a provision in SECURE 2.0, a comprehensive retirement security package Congress passed in December 2022, codified the auto-portability process so that a worker's 401(k) plan can be automatically rolled over to a new employer when changing jobs. The provision also raised the auto-portability threshold to $7,000 from $5,000.
Last year, a team of the nation's top record keepers launched an auto-portability consortium aimed at reducing plan leakage with respect to small accounts.
GAO is recommending a similar idea on a larger scale.
