A coalition of major 401(k) administrators launched the Portability Services Network in November 2023 to address financial losses when employees leave jobs with small retirement account balances. The system automatically rolls departing workers’ accounts into safe harbor IRAs, where they remain until the network matches them with new employer plans that also participate in the network.
Research from Vanguard, one of the participating administrators, demonstrates the program’s impact on cash-out behavior. Among workers with balances under $1,000, the proportion who cashed out within ten months of leaving their job fell to approximately 9% from about 50% after their employers joined the network. For those with balances between $1,000 and $7,000, the cash-out rate declined to 31% from 39%. However, a significant limitation has emerged: only about 6% of accounts transferred into interim IRAs have successfully moved to new employer plans as of early 2026, primarily because relatively few employers have opted into the system.
The typical worker affected by these automatic transfers is 31 years old, earned roughly $20,000 annually, and had worked for approximately six months at their previous employer. Analysis of approximately 220,000 rollovers through Vanguard showed median balances of just $200, with nearly three-quarters involving less than $1,000. Currently, 23,787 employer plans have adopted automatic portability, representing 7.73 million participants out of an estimated 96 million in workplace retirement plans. As of the analysis period, 1.22 million eligible participants were waiting for matches with new employers.
While keeping savings in interim IRAs avoids the immediate tax consequences of cash-outs, challenges remain. Management fees may erode small balances over time, particularly those held in conservative default investments. Additionally, IRS regulations create complications for Roth 401(k) holders, as Roth IRAs cannot be rolled into new employer 401(k) plans. Network officials are advocating for legislative changes to permit Roth dollars in automatic portability arrangements.
Research from Empower, a founding partner in the portability network, found that 84% of workers have changed employers at least once, while younger generations report higher rates of lost track of retirement savings from previous employers.
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