When Alyssa Bridgeman left her warehouse logistics job in 2021, she didn’t think much about the $2,800 sitting in her 401(k). She started a new position, enrolled in a new plan, and moved on. Two years later, she learned her old balance had been pushed into a default IRA invested in a money-market fund earning next to nothing. “I didn’t even know that could happen without my permission,” she told a benefits counselor, according to a case summary published by the Government Accountability Office.
Her experience is not unusual. An estimated 29 million 401(k) accounts have been left behind by workers who changed jobs, holding a combined $1.65 trillion in assets, according to a 2023 analysis by Capitalize, a financial technology firm that tracks forgotten retirement accounts. Much of that money sits in plans the account holder no longer monitors, slowly eroding through fees or parked in ultra-conservative investments that barely keep pace with inflation.
Now, for the first time, a system exists to move those stranded balances automatically. Under authority granted by Congress in the SECURE 2.0 Act of 2022 and guided by a proposed Department of Labor regulation, retirement savings can be transferred from a former employer’s plan into a worker’s current one when they switch jobs, without the worker filling out a single form. A private consortium called the Portability Services Network, built on technology developed by Retirement Clearinghouse, has already begun processing those transfers through some of the largest 401(k) recordkeepers in the country. As of mid-2026, it represents the most ambitious attempt yet to plug a leak in the U.S. retirement system that policymakers have documented for more than a decade.
How the money gets lost
The problem centers on small balances and job changes. When a worker leaves a company without telling the plan administrator what to do with their 401(k), the plan sponsor has limited options under federal rules. Accounts below a certain dollar threshold can be “forced out” of the plan entirely. Before SECURE 2.0, that threshold was $5,000. Section 304 of the law raised it to $7,000 for distributions made after December 31, 2023.
Balances above $1,000 but below the threshold are typically rolled into a default “safe harbor” IRA, often invested in a money-market or stable-value fund. Two GAO investigations documented what happens next. GAO-15-73, published in 2015, found that forced transfers into default IRAs created friction, fees, and a disconnect between workers and their savings. Accounts parked in conservative default investments earned far less than they would have inside a diversified 401(k) portfolio. A follow-up review, GAO-19-88, found that uncashed distribution checks and poor recordkeeping sent retirement funds to state unclaimed-property offices, where the tax treatment was murky and reuniting the money with its owner proved difficult.
Workers with lower incomes and shorter job tenures absorb the worst of it. Consider a 30-year-old who cashes out a $3,000 balance instead of rolling it over. After a 10 percent early-withdrawal penalty and federal income tax at the 22 percent bracket, roughly $960 disappears immediately. If that $3,000 had stayed invested and earned a 7 percent average annual return, it would have grown to more than $22,000 by age 65. The real cost of cashing out is not the penalty check. It is the decades of compounding that never happen.
What Congress and the DOL built
Section 120 of the SECURE 2.0 Act created the legal foundation for automatic portability by adding a prohibited-transaction exemption to 26 U.S.C. Section 4975. Without that exemption, a service provider that charged a fee to locate a worker’s new employer plan and roll money into it would face fiduciary conflict-of-interest concerns under ERISA. The new provision cleared that obstacle, opening the door for commercial auto-portability services to operate within the law.
In January 2024, the Employee Benefits Security Administration (EBSA), the DOL division that oversees private retirement plans, released a proposed regulation to flesh out the framework. The rule set conditions on fees, fiduciary conduct, participant notices, and the right to opt out. It built on groundwork the agency laid in 2018, when it issued Advisory Opinion 2018-01A. That opinion addressed the specific mechanics of Retirement Clearinghouse’s auto-portability pilot program, not auto-portability as a general concept. It described a two-step process: a mandatory distribution from the old plan lands in a default IRA, and then an automated roll-in moves the balance into the participant’s new employer plan once a recordkeeper match is found.
As of June 2026, the proposed rule has not been finalized. The public comment period closed, but the DOL has not published a final regulation or provided an updated timeline for adoption. That regulatory limbo matters because, without a final rule, the guardrails around fees, disclosures, and opt-out procedures remain in draft form.
The network going live
While regulators work through the rulemaking process, the private sector has moved ahead. The Portability Services Network launched in November 2023 as a consortium of major recordkeepers that agreed to share participant data through a centralized digital hub. The technology powering the network was developed by Retirement Clearinghouse, the same firm whose pilot program prompted the DOL’s 2018 advisory opinion.
The mechanics work like this: when a participant leaves one employer and starts contributing to a new plan serviced by a member recordkeeper, PSN’s system identifies the match and initiates a transfer of the old balance into the new account. The worker does not need to fill out paperwork or even know the process is happening, though they retain the right to opt out.
In a launch announcement, PSN called it the nation’s first large-scale auto-portability solution. A subsequent update reported early adoption metrics, including the number of participating plans and covered workers, and claimed the network had “jump-started” nationwide use of automatic roll-ins.
Those figures deserve scrutiny. PSN’s numbers come from its own press materials and have not been independently verified through EBSA Form 5500 filings, third-party audits, or federal enforcement data. The network’s founding members are among the largest recordkeepers in the industry, which gives it significant theoretical reach. But participation by individual plan sponsors is voluntary. An employer whose recordkeeper belongs to PSN still has to agree to enable auto-portability for its specific plan. How many have done so, and how many transfers have actually been completed end to end, remains unclear from public records alone.
What workers and employers should watch
Several open questions will shape whether automatic portability delivers on its promise or stalls as a niche feature.
Coverage gaps. The system works only when both the old and new employer’s plans are connected to the same network. Workers who move between a PSN-linked plan and one serviced by a non-member recordkeeper will not benefit. Industries with high turnover and small employers, exactly the places where cashout rates are highest, may be the slowest to join.
Fee transparency. Auto-portability providers are permitted to charge for the service. Retirement Clearinghouse has publicly described a fee of up to $35 per transfer in its pilot program materials, but the proposed DOL rule has not locked down final fee caps or standardized disclosure requirements. For a worker with a $1,500 balance, a $35 fee represents more than 2 percent of the account. Workers need clear, upfront information about what the transfer will cost before it happens.
Communication and opt-out mechanics. The proposed rule requires participant notices and an opt-out right, but the specifics of how and when workers will be told their money is being moved have not been finalized. A transfer that surprises a participant, especially one who intended to roll the balance into a personal IRA or consolidate accounts on their own terms, could erode trust in the system rather than build it.
Roth and after-tax balances. Many 401(k) participants now hold Roth contributions alongside traditional pre-tax money. The treatment of Roth balances in an automatic roll-in adds complexity: the receiving plan must accept Roth rollovers, and the transfer must preserve the contribution’s tax basis and five-year holding period. Not every plan is set up to handle that, which could create gaps in who benefits.
Measuring success. The proposed regulation does not define specific benchmarks, such as a target reduction in cashout rates, fewer accounts landing in state unclaimed-property programs, or improved retirement balances for low-wage workers. Without published metrics tied to verifiable data, it will be difficult to tell whether auto-portability is closing the leakage gap the GAO identified or simply redirecting balances that would have stayed invested anyway.
What still has to go right
The legal framework and the technology now exist to let a 401(k) follow a worker from job to job without that worker lifting a finger. Congress wrote the statute. The DOL drafted the rules. A consortium of the country’s biggest recordkeepers built the infrastructure. But the final regulation is still pending, plan-level participation is voluntary, fee disclosures remain in draft form, and the independent data needed to judge early results has not yet surfaced.
For the roughly 50 million Americans who will change jobs at least once in the next five years, according to Bureau of Labor Statistics turnover data, the stakes are not abstract. Every forced-out balance that lands in a low-yield default IRA and stays there is a small failure of a system that was supposed to help people build wealth over a career. Auto-portability is the most credible fix Washington and the private sector have produced. Whether it actually reaches the workers who need it most depends on what happens in the next round of rulemaking, the next wave of employer adoption, and whether anyone is keeping score.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
