--- title: The Recordkeeper Case for Auto Portability description: Writing in the RCH Consolidation Corner Blog, Steve Holman, SVP of PSN Strategy & Development, lays out the case for auto portability from the perspective of defined contribution recordkeepers. Holman identifies four important reasons why auto portability is beneficial, including 1) delivering a positive ROI, 2) differentiating their value proposition, 3) industry collaboration & reciprocity and 4) strengthening the DC system by addressing the small account problem at scale. “Auto portability” concludes Holman, “is not simply an operational enhancement – it is a foundational capability for the future of defined contribution plans.” image: https://blog.rch1.com/hubfs/The%20RKer%20Case%20for%20Auto%20Portability.png --- [![Retirement Clearinghouse Logo](https://blog.rch1.com/hs-fs/hubfs/raw_assets/public/Retirement_Clearinghouse_May2022/images/logo.png?width=1000&height=648&name=logo.png "Retirement Clearinghouse Logo")](https://rch1.com/) [Privacy Policy](https://securities.rch1.com/common/PrivacyStatement.pdf) [Sponsors/Service Providers](https://rch1.com/plan-sponsors) [Individuals](https://rch1.com/individuals) [Login](https://rch1.com/#) - [Home](https://rch1.com/home-page) - 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Delivered via the recordkeeper-led [Portability Services Network (PSN)](https://psn1.com/)and powered by [Retirement Clearinghouse (RCH)](https://rch1.com/) technology, it transforms inefficient, standalone automatic rollover processes into a standardized, automated, digital ecosystem that preserves small-balance retirement savings within the plan recordkeeping framework. For recordkeepers, auto portability is more than a new service – it is a strategic capability that enhances client value, strengthens competitive positioning, reduces operational friction and advances the long-term health of the retirement system. Here are four important reasons why defined contribution [recordkeepers representing 63% of the defined contribution market](https://psn1.com/auto-portability/regulatory-information/participating-recordkeepers) (participant basis) have embraced auto portability, and why more recordkeepers will soon follow suit. **1. Auto Portability Produces a Positive ROI** Auto portability produces positive economic outcomes for everyone – for participants, plan sponsors, plan advisors and yes, for defined contribution recordkeepers – quickly producing a positive return on investment (ROI) based solely on the one-time and ongoing costs and benefits. Sure, there is a modest one-time investment required for recordkeepers to integrate auto portability’s technology, but the integration effort is greatly simplified via the use of standard application program interfaces (APIs). How do we know? It’s been definitively proven via successful implementations at multiple large recordkeepers. Once up and running, auto portability initiates a virtuous economic cycle: - A greater percentage of plan sponsors will establish automatic rollover provisions to allow for the adoption of auto portability. - At termination, around 50% fewer participants will cash out, resulting in an initial increase in the number of safe harbor IRAs that are established following termination. - While higher in absolute numbers, these safe harbor IRAs have much shorter durations than [“traditional” dead-end safe harbor IRAs](https://rch1.com/blog/dressing-up-traditional-automatic-rollovers), as they are made available to the PSN network for location, matching and plan-to-plan transfers. This is sometimes referred to as the “recycling” effect.   The important aspect for recordkeepers to understand is that, over time, they should expect significant flows of assets back into plans they serve. It is this flow of roll-ins back into their environment that is completely absent in a world with no auto portability, and where recordkeepers realize the bulk of their quantitative benefits. The bottom line is that, when participants [cash out](https://rch1.com/401k-cashout-leakage) or roll funds out of the system, recordkeepers lose assets under administration. Auto portability helps keep assets invested within the defined contribution ecosystem, facilitates plan-to-plan “roll-in” flows instead of leakage and serves to increase average account balances over time. **2. Differentiates the Value Proposition to Plan Sponsors** Recordkeepers are the primary interface through which plan sponsors can access auto portability – and auto portability is quickly becoming [a high-demand plan feature](https://rch1.com/blog/larger-401k-plans-embrace-auto-portability-as-due-diligence-drives-confidence). By offering auto portability, recordkeepers enable their clients to: - Reduce plan leakage and administrative burden - Improve participant outcomes and plan metrics - Enhance plan competitiveness This positions their platform as forward-looking, fiduciary-aligned, and innovation-driven – all representing important differentiators in a crowded marketplace. **3. Industry Collaboration and Reciprocity** Auto portability operates as a recordkeeper-led utility, built on shared infrastructure and interoperability. It connects recordkeepers through a nationwide digital hub, enables secure, standardized account matching and transfers across platforms and scales through broader participation, as each new recordkeeper increases the network’s value. PSN’s collaborative model emphasizes reciprocity and equal participation, aligning competitors around a shared objective: improving retirement outcomes while reducing inefficiencies. **4. Addresses the Small Account Problem at Scale** [Small-balance accounts](https://rch1.com/plan-sponsors) represent a persistent challenge for recordkeepers and the plan sponsor clients they serve, as they tend to drive: - High administrative cost relative to asset size - Increased complexity managing terminated participants - Elevated risks related to missing participants and uncashed checks Auto portability directly solves this issue by automatically consolidating small balances into active accounts, reducing the volume of stranded accounts in the system. Recordkeepers who embrace auto portability will be serving to strengthen the entire defined contribution system, while simultaneously acting in their own economic interests. **A Strategic Opportunity** Auto portability is not simply an operational enhancement – it is a foundational capability for the future of defined contribution plans. Auto portability positions recordkeepers at the center of a more connected, efficient, and participant-focused retirement system that delivers stronger client value, lowers operational friction, improves asset retention and resides on a scalable, future-ready infrastructure. 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