A coalition of major 401(k) administrators has launched the Portability Services Network to help workers retain retirement savings when changing jobs. The system, which began operations in November 2023, automatically rolls small 401(k) balances into safe harbor IRAs rather than cashing them out, then attempts to match those accounts with workers’ new employer plans.
Research from Vanguard shows the initiative has successfully reduced cash-outs. Among workers with balances under $1,000, the cash-out rate dropped to approximately 9% from roughly 50% after employers joined the network. For accounts between $1,000 and $7,000, the rate fell from 39% to 31%. However, the system faces a significant limitation: only about 6% of accounts transferred into interim IRAs have successfully moved to a new employer’s plan as of early 2026, primarily because participation remains limited among receiving employers.
The network currently includes 23,787 plans representing 7.73 million participants, with approximately 1.22 million eligible participants waiting to be matched with new employers. Since November 2023, the system has facilitated over 53,000 completed transactions totaling $71.3 million in transferred assets. The typical affected worker is 31 years old, earned approximately $20,000 annually, and had worked for their previous employer about six months.
While keeping funds in interim IRAs avoids immediate tax penalties associated with cashing out, the arrangement presents challenges. Management fees on small balances can erode savings, particularly in conservative default investments. Additionally, Roth 401(k) savings cannot be rolled into new employer Roth 401(k) plans under current IRS rules, complicating portability for those account holders. Network leadership has indicated they are advocating for legislative changes to address this restriction.
Survey data indicates that career mobility remains common, with 84% of workers having changed employers at least once. Notably, half of Generation Z and 45% of millennials report possibly losing track of retirement savings from previous employers, suggesting ongoing challenges with account management despite portability solutions.
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