Benefits December 4, 2024

New Jersey Auto-IRA Program Reaches $1M in Retirement Savings

Approved in 2019, RetireReady NJ launched in July in coordination with Vestwell.

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New Jersey’s state-administered retirement savings program for private sector employers, RetireReady NJ, has collected $1 million in retirement savings since its launch five months ago, according to an announcement from State Treasurer Elizabeth Maher Muoio.

RetireReady NJ launched a pilot program earlier in the year with four participating employers, with the full program starting in July. RetireReady NJ now supports thousands of New Jersey employees in saving for retirement.

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Businesses with at least 25 employees that have been in business for at least two years and do not currently offer employees a qualified retirement plan are required to register for the RetireReady NJ program. Employees are automatically enrolled into the program and have the opportunity to save for retirement through payroll deductions into a Roth or traditional individual retirement account.

The RetireReady NJ program was created by the New Jersey Secure Choice Savings Program Act, which Governor Phil Murphy signed in 2019. Murphy’s administration had estimated that Secure Choice could benefit nearly 2 million New Jersey residents and manage up to $10 billion in investments.

Murphy was re-elected in 2021, enabling him to stay in office to see the program debut this year, and Muoio praised the efforts of those who helped it launch.

“This milestone represents a crucial step forward toward financial security in retirement for many New Jerseyans,” Muoio said in a statement. “I’d like to thank the staff of RetireReady NJ for their diligent efforts to ensure saving for retirement is convenient and accessible for private sector employees across the Garden State, along with the many public and private sector partners who have helped spread the word about this new and important program.”

Vestwell, a third-party administrator, runs the program in coordination with the state’s treasury.

According to Georgetown University’s Center for Retirement Initiatives, state auto-IRA programs have accumulated $1.742 billion in assets since they were first established in 2017.

Rhode Island recently became the 20th state to launch an auto-IRA program: RISavers is partnering with a similar program in Connecticut to offer Rhode Islanders in the private sector access to retirement savings.

Administration December 4, 2024

Workplace Plan Portability Network Supports 5M Participants

One year after launch, the network to transfer stranded workplace balances between participating recordkeepers is live with about 15,000 plans.

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A little more than one year after the Portability Services Network went live with three of the country’s largest recordkeepers, with three more lined up, it has about 15,000 retirement plans in its system, covering 5 million participants, the PSN announced Tuesday.

The PSN is an initiative from Robert L. Johnson’s Retirement Clearinghouse LLC, a firm specializing in retirement plan consolidation in safe harbor individual retirement accounts. Through the PSN, employees with less than $7,000 in either a workplace defined contribution plan or a safe harbor IRA will see those savings automatically transferred to a new employer plan, as long as its recordkeeper is part of the network.

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The network is designed to prevent savers from forgetting about those tax-advantaged savings and to limit them from cashing out. Research from the Retirement Clearinghouse estimates that, over a 40-year period, $1.6 trillion might be preserved in the retirement system if automatic portability was standard across all plan sponsors and recordkeepers.

The participating recordkeepers whose systems are active are Alight, Vanguard and Fidelity Investments, with Empower set to go live in January. TIAA and Principal Financial Group will go live later in 2025, according to the PSN, which is advocating for more plan sponsors to join.

“Auto-portability was conceived as an innovation to benefit minority and women savers, and it is immensely gratifying to witness its coming to fruition,” Johnson, chairman of both the Portability Services Network and Retirement Clearinghouse, said in a statement.

As of December 1, PSN reported that 549 auto-portability transactions have been completed, with a much larger 7,841 transactions underway.

It takes about 30 to 90 days for a terminated participant or a job changer to become eligible for a mandatory distribution, according to a PSN spokesperson. Once the PSN confirms a match for portability, it takes about 60 days for the network’s auto-portability negative-consent process to go through.

There were about 740,000 401(k) plans in the U.S. as of 2022, according to the most recent data from ISS Market Intelligence, which, like PLANSPONSOR, is owned by ISS STOXX.

The PSN acts as a clearinghouse for locating a participant’s active account and transferring any separate tax-advantaged account with less than $7,000 into the participant’s active account. Recordkeepers that own or participate in the PSN do not receive compensation for facilitating auto-portability transactions from participants; they do, of course, have the ability to keep more funds on their collective platforms.

U.S. savers had $11.3 trillion in DC plans, as of June 30, according to the Investment Company Institute.

 

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