We spoke to Icon CEO Laurie Rowley about why outdated 401(k) plans contribute to the $4 trillion retirement gap and how portable retirement solutions are changing the game for both employees and employers in today's flexible workforce.

Q: How are traditional 401(k) plans falling short in closing the $4 trillion retirement savings gap?

A: The traditional 401(k) was created during an era when large corporations dominated the workforce and could provide the resources to manage these plans. Originally designed as a supplement to pensions, 401(k) plans were not built for today's workforce or for small- and medium-sized businesses (SMBs). For many SMBs, the compliance requirements, fiduciary responsibilities, and high costs associated with a 401(k) plan make it inaccessible. As a result, nearly half of the U.S. workforce lacks access to a retirement plan. The 401(k) system struggles to adapt to modern business needs and to provide adequate coverage, leaving a significant gap in retirement readiness.

Q: How are portable retirement solutions changing the game for both employees and employers?

A: Portable retirement solutions like the PRP by Icon are ushering in "Retirement 3.0," a new era in which retirement plans are flexible, mobile, and accessible for both employees and employers. For employees, portable plans mean they own their retirement savings from day one, eliminating the need for complex rollovers when changing jobs. This gives employees more control and helps them stay on track with their retirement goals, regardless of where their career takes them. For employers, especially SMBs, these plans remove the administrative burden, legal risk, and high costs associated with traditional 401(k)s, allowing them to offer retirement benefits without taking on the role of plan sponsor. Portable solutions simplify retirement for everyone involved.

Q. What type of employer is best suited the PRP?

A: The PRP is designed for modern businesses of all sizes, but it is especially beneficial for small and medium-sized businesses that struggle with the complexity and cost of traditional 401(k) plans. These companies often lack dedicated HR teams or resources to manage a retirement plan's compliance and fiduciary requirements. The PRP removes these barriers by shifting the legal and administrative responsibilities from the employer to Icon, allowing SMBs to offer retirement benefits that are affordable, easy to manage, and aligned with the needs of today's mobile workforce. It's a powerful solution for businesses that want to attract and retain talent without the burdens of a401(k).

Q: How does the PRP eliminate the rollover process when changing jobs?

A: Unlike traditional 401(k)s, which are tied to an employer, the PRP belongs to the employee from the start. This means that when employees change jobs, their retirement savings go with them seamlessly—no need for rollovers, no risk of leaving accounts behind, and no administrative hassle.

Related: You can take it with you: The portable retirement benefit for small employers

This approach fits today's workforce, where job mobility is common, and it ensures that employees can continue to grow their retirement savings consistently across their careers.

Q: How does Icon make consolidating old 401(k) plans effortless?

A: Icon's technology is designed to simplify and streamline the retirement planning experience, including consolidating old 401(k) accounts. Through the PRP platform, employees can easily bring in any old 401(k) balances, unifying their retirement savings into one account. This consolidation feature helps employees maintain control over their savings, reduces the risk of lost or forgotten accounts, and provides a clearer picture of their overall retirement progress. It's another way the PRP by Icon addresses the shortcomings of traditional plans and puts the power back in the hands of the individual.

Instant Insights /

Rise of portable retirement plans for small biz & gig economy

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