A coalition of major 401(k) administrators has launched the Portability Services Network to help workers retain retirement savings when changing jobs. The system automatically moves small account balances into a safe harbor IRA while attempting to match them with workers’ new employer plans, rather than allowing employers to cash out accounts under $1,000.
Research from Vanguard shows the initiative has significantly reduced cash-outs among participating employers. For workers with balances under $1,000, the cash-out rate fell to approximately 9% from 50% after employers joined the network. Among those with $1,000 to $7,000 in their accounts, the rate decreased to 31% from 39%. The network launched in late 2023 and includes major administrators such as Vanguard, Fidelity Investments, and Alight Solutions.
However, the system faces a critical limitation: only 6% of accounts transferred into interim IRAs have successfully moved to new employer plans as of early 2026, primarily because relatively few employers participate in the network. The typical affected worker is 31 years old, earned about $20,000 annually, and had worked for their previous employer for approximately six months. Among the roughly 220,000 outbound rollovers analyzed, the median balance was $200, with nearly three-quarters involving less than $1,000.
Cashing out retirement savings when changing jobs carries significant consequences, including income taxes and potential early withdrawal penalties for workers under 59½. Survey data indicates that 50% of Generation Z and 45% of millennials report having lost track of retirement savings from previous employers. Since the network’s launch, over 53,000 transactions totaling $71.3 million have been completed, though approximately 1.22 million eligible participants currently await matching with new employers.
Network administrators have identified additional challenges, including fee erosion on small balances held in conservative investments and complications with Roth 401(k) accounts, which cannot currently be automatically rolled into Roth IRAs under IRS rules. Officials are advocating for legislative changes to expand the system’s scope to include Roth savings.
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