Citing a “meeting of like minds,” John C. Malone, Chairman of Liberty Media Group, and Robert L. Johnson, Chairman of the RLJ Companies and the majority owner of Retirement Clearinghouse LLC (RCH), announced Malone has purchased a minority stake in RCH.

“I invested alongside Bob when he launched Black Entertainment Television. When Bob approached me to talk about his work with 401(k) auto portability, I recognized an opportunity to extend that work into practical ways to achieve inclusive capitalism,” said Mr. Malone. “In my view, shrinking the minority wealth gap is a long-term strategic issue for our nation’s economic and social health, and private-sector programs like auto portability can make a meaningful impact. Initiatives that have the potential to deliver outsized results while requiring little effort are few and far between. I am pleased to use my experience to fully support Bob and Retirement Clearinghouse in their work to preserve minority workers’ retirement savings when they change jobs.”

This announcement comes close on the heels of the news that Alight Solutions is leading the nationwide launch of the RCH Auto Portability Program, which is designed to help job-changing workers move their savings to their new employers’ plans when they change jobs. Doing so enables them to avoid cashing out, paying taxes, and being subject to penalties.

Every year, $92 billion leaves the U.S. retirement system when job-changing participants prematurely cash out their 401(k) savings accounts, and pay related taxes and penalties, based on data from the nonpartisan Employee Benefit Research Institute (EBRI), the retirement services industry’s gold-standard research provider. Black and Hispanic workers are the most adversely affected by this phenomenon—63% of Black and 57% of Hispanic workers cash out upon job-change, according to EBRI. Low-income and younger workers also have high cash-out rates, as 50% of workers earning $20,000 to $30,000 and 44% of workers between ages 20 and 29 cash out within a year of switching jobs.

“I am pleased to be working with John again to level the economic playing field for minorities,” said Mr. Johnson. “With auto portability on the cusp of mainstream adoption, our nation has a promising opportunity to finally close the retirement-savings gap for Blacks and other minorities. John and I have a long history of taking on big challenges, as we did with the founding of Black Entertainment Television, the first Black-owned company publicly traded on the New York Stock Exchange. With his guidance, we can change the status quo and do our part to close the wealth gap for America’s minority communities.”

The major cause of cash-out leakage is the lack of seamless plan-to-plan asset portability in the U.S. retirement system. RCH developed auto portability to help alleviate this crisis. Auto portability (https://www.rch1.com/auto-portability) is the routine, standardized, and automated movement of a worker’s 401(k) savings account from their former employer’s plan to an active account in their current employer’s plan. The U.S. Department of Labor (DOL) issued regulatory guidance in July 2019 and November 2018 which cleared the way for plan sponsors and recordkeepers to adopt the technology enabling auto portability.

On behalf of a large plan sponsor in the health services sector, RCH completed the first-ever fully automated, end-to-end transfer of retirement savings from a safe-harbor IRA into a worker’s active account in July 2017. Since that time, more than 1,600 workers have consented to have their former-employer plan accounts transferred into their current employers’ plans.

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