The preservation of small-balance 401(k) accounts – particularly those under $7,000 and subject to 401(k) plans’ automatic rollover provisions – represents an important challenge for America’s retirement system.

When job-changing workers cash out or abandon these accounts in dead-end safe harbor IRAs, they lose not just immediate savings, but can forego decades of compounded growth – reducing their odds of a comfortable or timely retirement.

Sometimes it seems, the universe sends you a signal that you haven’t been wasting your time.

For me, one such signal arrived in the form of a June 2nd, 2025 opinion piece by PensionBee executive Helene O’Brien, as well as industry reporting on comments from CEO Romi Savova, both drawing attention to the participant-unfriendly nature of some safe harbor IRAs, which house the forced-out retirement savings of separated participants with balances less than $7,000.

Auto portability, delivered via the Portability Services Network (PSN), is revolutionizing retirement savings preservation by addressing the critical challenges of cashout leakage and account fragmentation.
 

As America’s retirement savings landscape evolves, two groundbreaking initiatives could be poised to converge, potentially revolutionizing the way Americans save for retirement.

​​The Saver's Match program, set to debut with the 2027 tax year, and auto portability, powered by the Portability Services Network (PSN), present a unique opportunity to address long-standing challenges in the retirement system. By leveraging the strengths of both programs, we can create a more robust and efficient retirement savings ecosystem that benefits millions of American workers.

In the world of retirement savings, auto portability has emerged as a transformative solution designed to address the persistent problem of cashout leakage – when employees cash out their retirement savings upon changing jobs, rather than moving their savings forward into their new employer-sponsored plan.

Auto portability will deliver broad-based benefits to America’s workforce, but research has shown that the new feature disproportionately benefits under-saved and underserved demographic segments, including minorities, women, lower-income and younger workers.

Recently, we’ve read – mainly via paid promotions – about the existence of so-called “world-class” automatic rollover IRA services, which seem to be little more than old-school, traditional automatic rollover IRAs laying claim to unspecified, premium features.

With the release of Vanguard’s September 2024 study (Job transitions slow retirement savings), we can consider adding a new term – shrinkage – to the lexicon of retirement savings ills associated with America’s mobile workforce, taking its spot alongside its sibling, cashout leakage.

When it comes to locating missing plan participants, electronic searches or “e-searches” are an indispensable tool. While it’s been proven that e-searches can be highly effective, inevitably situations will arise where plan sponsors must do something more, and that typically involves performing a more intensive search, where additional search resources are applied to improve the quality of the search, over and above what an e-Search can deliver.

In July, an article noted that the adoption of auto portability was picking up steam with thousands of plan sponsors already signing up for the service, delivered by the Portability Service Network (PSN). As I write this around six weeks later, that figure continues to rise at a brisk pace.

As PSN operations have commenced, and as the automated plan-to-plan consolidation of small balances begins, a familiar industry adoption pattern is emerging – where innovators within the plan sponsor community lead the charge and are quickly followed by others.

For plan sponsors who are still considering adopting auto portability, here are four compelling reasons why you should move now to embrace the new plan feature.