Switching Jobs? Your 401(k) Balance Could Be Automatically Transferred Under a New Federal Rule

Workers changing jobs could have their retirement savings automatically transferred to plans at their new jobs under a proposed federal rule.

The U.S. Department of Labor is considering allowing Retirement Clearinghouse LLC to run a program that automatically transfers small 401(k) balances into individual retirement accounts when employees leave a job. Then, when they start a new job, RCH would automatically transfer the savings into the new employer’s 401(k) plan.

Why This Matters

This would help solve what Retirement Clearinghouse calls a “cash-out crisis.” Many people cash out their 401(k) savings when they change jobs rather than going through the process of transferring them to a new job. This hurts their long-term savings, the company said in a statement. Spencer Williams, CEO of Retirement Clearinghouse, did not immediately return a call seeking comment.

How the Program Works

The RCH Auto Portability Program rolls over balances of less than $5,000 from the old 401(k) plans into an IRA (here’s a cheat sheet on the difference between the two). The company sends a letter to departing employees tell them their 401(k) will be placed into an IRA unless they respond.

The company uses technology called “locate, match and transfer” to detect when the IRA owner starts a new job. It then moves the money from the IRA into the new job’s retirement plan. Employers and plan providers can sign up for the program.

Dennis R. Nolte, a certified financial planner and vice president of Seacoast Investment Services, said most planners would be happy to be rid of the headache of dealing with small leftover account balances. More programs like this could help make sure retirement savings stay invested in a plan, he said.

Are There Downsides?

Jon L. Ten Haagen, certified financial planner and founder of Ten Haagen Financial Group, said he wouldn’t want a company deciding on its own what to do with his retirement savings. Moving your money into a new company’s 401(k) isn’t always the best choice, he said, because it “may or may not be a piece of garbage.” The company managing the IRA in between jobs may also not make the right investment choices for you, he said.

Companies should educate departing workers about their best options for their retirement savings instead.

“There are many questions to be answered,” Ten Haagen said.

What’s Next?

The Department of Labor is taking comments on whether to allow RCH to take a fee when it transfers money to a new employer’s account without the IRA holders explicit permission. The comment period lasts until December 24.

Starting a new job? Aside from dealing with your old retirement plan, don’t forget these money tasks.

This article originally appeared on Policygenius and was syndicated by MediaFeed.org.

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How Blockchain Technologies Can Enhance Cross-Industry Transparency

Now, blockchain technologies are poised to enhance cross-industry transparency via improvements to charity and donation programs.

I spoke with Changpeng Zhao, CEO of the cryptocurrency exchange company Binance, which runs the Blockchain Charity Foundation (BCF)–a wing of the company that’s devoted to global sustainable development. He shared how blockchain technologies can enhance transparency within a huge range of industries by making donation and charity systems easier to track and understand.

The Trouble with Current Donation Systems

There are so many disparate industries these days that it can be challenging to find any commonalities beyond death and taxes. But here’s one thing most industries have in common: At least some people and organizations within said industries are likely to participate in charity or donation programs.

That’s good news for society, but there’s just one problem: Donation systems notoriously lack transparency, which can lead to corruption and wear down the public’s trust–thereby decreasing the odds that people and organizations will continue to donate to worthy causes.

After piloting disaster relief donations via a campaign for West Japan flood donation, Zhao is intimately familiar with the lack of transparency that pervades so many charity programs.

“It was quite hard to push money to the ultimate beneficiaries–to identify who they are and who needs help,” Zhao says. Because the process of collecting and distributing donations is generally an opaque one, Zhao says not many people can understand where the money goes unless they’re provided with a detailed written report.

“Everyone sees one layer of transaction,” Zhao says. “The people who donated to us trust us to make good use of the money, but they no longer know where the money went until we publish that report.”

Zhao is concerned this can limit people’s willingness to donate. “In addition to being worried that the money may or may not be put to good use, the lack of transparency also reduces the sense of personal achievement,” he says. “If you can see where the money is going, that will help a lot in terms of personal feelings of achievement–so that’s very important.”

All of this helps explain why the BCF is committed to developing a fully transparent charity platform.

Making Charity Programs More Transparent

Zhao and his BCF maintain that employing blockchain technology within the charity ecosystem will yield a more efficient and transparent system and enhance the odds that donations will be distributed to those most in need.

“When it comes to the BCF program, our aim is to focus on transparency through this tracking portal,” Zhao says. “We want a completely transparent system.”

“Looking at the UN Sustainable Development Goals, the first few in the list could all be easily enhanced with a more transparent charity program,” Zhao says. “This increased transparency will prompt people to donate more and that will help a number of the initiatives including poverty, health, quality of education, gender equality and more.”

Rather than advocating for a specific charity, the BCF aims to help all charity initiatives via its blockchain charity platform.

Making Donation Systems More Transparent

In order to establish a fully transparent charity system, it’s necessary to track donations through multiple layers of donors, charity programs, NPOs, local supporters, and the ultimate beneficiaries.

That’s a tall order, but Zhao says Binance’s blockchain donation portal is capable of achieving it.

“As long as all of the transactions stay on-chain (done via cryptocurrency), blockchain tracks everything automatically,” Zhao says. “The job of the BCF portal is to collect the information on the blockchain and present it in an easy to understand manner. You can see the number of transactions of the incoming donations and the number of outgoing transactions for beneficiaries. And in between these two, there could be multiple layers for NPOs, local partners… etc., so we can track all of those in an easy to visualize way.”

The emphasis here is on easy to understand. Revealing oodles of data in and of itself doesn’t enhance transparency; it’s making that data accessible and understandable by all parties involved that provides greater clarity within donation systems.

The Importance of Education

In order to onboard more charitable organizations, governments, corporations, and grassroots communities, Zhao says the BCF first has to educate people about the value of the blockchain and cryptocurrencies.

The foundation is approaching this effort in several ways. For starters, the BCF is beginning to partner with universities and governments to educate teens and university students about cryptocurrency, blockchain, and so on.

“We also try to push very hard for the ultimate beneficiaries to accept cryptocurrency, so that will be a good way [for] people to learn,” Zhao says. “If users receive donations via crypto and these users need to learn about cryptocurrency or require help installing a wallet to receive the donation, there is a high incentive to learn that.”

Zhao is also hopeful that an increasing number of people and organizations from far-ranging industries will get on board with the blockchain in pursuit of a transparent charity platform.

“There [are] a lot more people that understand blockchain… [compared to a] few years ago, so today it is easier to push,” Zhao says. “I think the most significant challenge in expand[ing] BCF’s impact is really just educating people on blockchain. The more people who understand blockchain, the easier it is for BCF to push our impact.”

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Who Should Sit on Facebook’s Supreme Court? Here Are 5 Top Candidates

Facebook CEO Mark Zuckerberg said this week the company will create an oversight board to help with content moderation. The move is a belated acknowledgement Zuckerberg is out of its depth when it comes to ethics and policy, and comes six months after he first floated the idea of “a Supreme Court … made up of independent folks who don’t work for Facebook.”

The idea is a good one. If carried out properly, a “Supreme Court” could help Facebook begin fixing the toxic stew of propaganda, racism, and hate that is poisoning so much of our political and cultural discourse.

But how would a Facebook Supreme Court actually work? Zuckerberg has offered few details beyond saying it will function something like an appeals court, and may publish some of its decisions. Meanwhile, legal scholars in the New York Times have suggested it must be be open, independent and representative of society.

As for who should sit on it, it’s easy to imagine a few essential attributes for the job: The right person should be tech savvy, familiar with law and policy, and sensitive to diversity. Based on those attributes, here are five people that Facebook should select if it is serious about creating an independent Supreme Court.

Zeynep Tufekci

(Julia Reinhart/ Getty Images)

(Julia Reinhart/ Getty Images)

A Turkish sociologist and computer programmer, Tufekci was one of the first to raise the alarm about the moral and political dangers of social media platforms. She is a public intellectual of the internet age, using forums like the New York Times and Harvard’s Berkman Center to denounce Silicon Valley’s failure to be accountable for the discord it’s fostered. Tufecki has also taken aim at Facebook’s repeated use of “the community“—a term that is meaningless to describe 2 billion users—to defend its policies.

Peter Thiel

(Photo by Stephanie Keith/Getty)

(Photo by Stephanie Keith/Getty)

An iconoclast who has built several public companies, Thiel is also a lawyer who started the venture capital firm Founders Fund. A gay conservative and a supporter of Donald Trump, Thiel is deeply unpopular with Silicon Valley’s liberal elites—which is why his appointment would ensure ideological diversity on Facebook’s Supreme Court. Thiel is an early investor in Facebook and a longtime board member, which gives him a deep knowledge of the company. He would have to give up these positions to preserve the body’s independence.

Judge Lucy Koh

Koh has presided over numerous high-profile technology trials and is highly regarded in Silicon Valley. Her work as a federal judge includes the long-running patent trial between Apple and Samsung, as well as a case involving an antitrust conspiracy between Google, Adobe, and other firms. Her work on the bench and inspiring personal biography made her the subject of a flattering 2015 Bloomberg profile. Koh’s familiarity with the political and legal strategies of tech giants would provide invaluable expertise for Facebook’s Supreme Court (provided federal ethics rules permitted her to do so).

Tim Berners Lee

(Nicolas Liponne via Getty)

(Nicolas Liponne via Getty)

Sir Berners Lee is a computer science professor at Oxford University and MIT, who is best known as the inventor of the World Wide Web. Highly regarded in tech circles for his humility and vast knowledge, Berners Lee in recent years has become a vocal critic of the advertiser-based business models of the Silicon Valley tech giants. Appointing him to Facebook’s Supreme Court would show the company is serious about fixing its systemic problems with privacy.

Bozoma Saint John

(Wesley Hitt/Getty Images)

(Wesley Hitt/Getty Images)

Saint John, who was raised in Ghana, became a familiar name in tech circles when she became Apple’s head of music marketing after the company acquired her former employer Beats. She also worked at Uber before moving to the talent agency Endeavour. Saint John’s outspoken views on Silicon Valley’s white male culture would help inform Facebook’s Supreme Court in tackling hard issues of diversity.

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