Millennium Trust Will Add Auto-Portability to IRA Rollover This Year

The new functionality is intended to reduce retirement savings leakage and expand access to savings options. 

Millennium Trust Company LLC announced it will offer automatic portability functionality for its automatic rollover IRA solution, which has about 3 million participants.

Auto portability defaults individuals to transfer their retirement savings from a former employer’s retirement plan to an auto-rollover IRA unless they opt out. They can then move savings to their new 401(k) or a similar employer-sponsored retirement plan.  

According to Millennium Trust, the new feature will be ready for client testing by the end of June 2023. After it will go live Jan. 1, 2024, the start of the new plan year and coincides with the Secure 2.0 provisions that permit auto portability. 

The firm says that data matching is among the aspects it will be client testing for in June. “But overall, we want to ensure clients who choose to add the auto portability feature to their automatic rollover solution are prepared well ahead of the go-live date on Jan. 1, 2024,” said Erik R. Beck, chief commercial officer at Millennium Trust, in an emailed response. 

Reducing Leakage 

The firm’s initiative aims to combat retirement savings leakage by reducing friction for participants when moving savings, expanding access to savings options, and offering more financial education.  

“One thing often left out of the auto portability discussion is that an existing automatic rollover IRA solution is necessary to enable auto portability,” said Beck. “Our new auto portability feature is an expansion of our efforts to eliminate friction in the transfer of funds between accounts within the retirement system. Plan sponsors who choose to offer auto portability will be able to use Millennium Trust’s solution to match their former participants to the individuals’ new employer retirement plans.” 

An industry-wide initiative for auto-portability has been taking off. Earlier this year, both Empower Retirement and TIAA signed on to the Portability Services Network LLC consortium, a group of participating recordkeepers.  

The network is set up to automatically move retirement plan savings of $5,000 or less to a worker’s new provider upon a change of job. 

Millennium Trust says it is leaning into auto-portability as it builds upon existing efforts. “We are investing millions in reducing friction and improving our search-and-engage services, so including an auto portability feature is just a logical extension as we continue to enhance our capabilities,” said Beck.  

“Also, as the country’s largest independent provider of automatic rollovers, we partner with the majority of the largest recordkeepers and thousands of TPAs and plan sponsors, and we want to give them options,” Beck said. “They don’t need to go somewhere else or build out a ton of new technology. We can leverage our scale and technology integrations to quickly and easily bring this feature to any clients who want it.” 

Optional Add-on  

For Millennium Trust, the new functionality is an optional add-on to the Oak Brook, Illinois-based company’s existing auto-rollover solution, which allows low-balance accounts of non-responsive former employees to be rolled over to an IRA. This maintains the tax advantages of the retirement savings system and reduces leakage.  

Plan sponsors have the option to add auto-portability to their existing automatic rollover solution through Millennium Trust or another provider, as the firm offers an open-network approach to this functionality.  

“Millennium Trust wants to make a broad impact on keeping money in the retirement system by partnering with recordkeepers, third-party administrators, plan sponsors and others in our industry,” said Dan Laszlo, Millennium Trust’s CEO, in a statement. “We welcome any current and future retirement industry providers to join us in this mission. No matter the size of the partner, we want to provide a no-cost, fast and easy option to connect so they can offer their clients choice.”