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Worried About Losing Your Old 401(k)s? ‘Portability’ Measures Can Help


In addition to introducing two bills in September to remove savings roadblocks and ensure gig workers and part-timers have access to tax-advantaged plans, Democrats have introduced the Portable Retirement and Investment Account (PRIA) Act of 2021 to allow Americans to take along their retirement funds more easily throughout their careers. And in a move not directly related to that legislation but in keeping with its goals, Vanguard announced plans to simplify the rollovers of small-balance 401(k) plans, which should also help working-class people save more for retirement and not lose track of the funds they saved up. The coincidence of these governmental efforts and those of one of the world’s biggest brokerages marks a heightened public and private focus on tackling the country’s retirement savings deficit by allowing retirement savers to better follow, grow and access their nest eggs.

Consider working with a financial advisor as you take steps to ensure that you will have enough to retire on comfortably.

Portable Retirement and Investment Account Act

Sen. Mark Warner (D-Va) and Rep. Jim Himes (D-Conn) introduced the PRIA Act of 2021 to create “universal, portable retirement and investment accounts for all Americans throughout their lives,” their announcement said.

The measure would give all Americans a PRIA when they get their Social Security numbers. After the creation of the initial account, account holders may choose investment options from a qualified financial institution. Employers can contribute to their employee’s PRIA just like legacy plans such as 401(k)s, but employees who separate from their employer will still have the ability to contribute to the same PRIA plan as before.

Americans who want to keep their 401(k)s, individual retirement accounts (IRAs) and other savings plans with which they are familiar will still have those options.

Vanguard’s Auto-Portability Plan

But the government isn’t the only one proposing easier ways for retirement savers to carry their 401(ks) with them throughout their careers. Vanguard, the Malvern, Pa.-based brokerage juggernaut, said this week that it will introduce an auto portability service for 401(k) sponsor clients and their participants. The plan automates the movement of an employee’s 401(k) savings account from his or her former employer’s plan into an active account with the person’s current employer’s plan. The goal is to “simplify small-balance 401(k) rollovers, help more employees preserve their retirement savings and improve their chances of investment success,” the company said.

When a participant with less than $5,000 in a 401(k) plan changes jobs and does not move his or her money, the plan can transfer the account savings into an individual retirement account. The IRAs are then typically invested in either a money market fund or certificate of deposit, which do not offer high returns. Worse, workers can forget about their retirement funds over time and lose track of them.

Vanguard plans to work with Retirement Clearinghouse on the initiative, which is expected to launch in mid-2022.

The Bottom Line

Asian-American farmer in a greenhouseThese government and corporate auto-portability plans, though not expressly related, both come amid growing concerns about the lack of Americans’ retirement preparedness and fears over Social Security’s viability. The proliferation of auto-portability for tax-advantaged plans could empower workers to save more and worry less — while facilitating their ability to track and grow their nest eggs.

Tips on Retirement

  • It takes more than discipline to establish a retirement savings regimen; it takes wise asset and investment vehicle selection, appropriate budgeting measures and periodic evaluations … just what a financial advisor can be especially useful for. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor, get started now.
  • One of the best ways to handle the above-mentioned periodic evaluations is with a free retirement calculator.

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