Research summary

The promise and limits of 401(k) auto portability

October 07, 2026

Retirement leakage remains a challenge as workers change jobs, particularly when 401(k) balances are cashed out. Vanguard research, Does Portability Services Network preserve retirement savings? Early evidence by Fiona Greig, Kelly Hahn, and Fu Tan suggests that a new initiative designed to address this leakage can substantially reduce cash-outs for the smallest 401(k) balances. However, it hasn’t achieved widespread success because of limited network coverage and associated fees during the transition.

The goal of the Portability Services Network

In October 2022, Vanguard, Fidelity, and Alight partnered with Retirement Clearinghouse (RCH) to launch the Portability Services Network (PSN). The PSN serves as an industrywide platform to locate a participant’s new employer plan and facilitates the plan-to-plan consolidation of eligible small balances below $7,000.

“The PSN was created to help address retirement plan leakage by facilitating the transfer of eligible small balances into participants’ new employer retirement plans when they change jobs,” said Greig, global head of investor research and policy at Vanguard. “While the results have been encouraging for reducing cashouts, most transferred balances have not yet been matched to their next employer plan due to low employer adoption. This leaves accounts in interim IRAs where fees can erode savings, particularly for low balance accounts.”

Auto portability through PSN primarily reaches young, mobile workers in high-turnover roles among Vanguard recordkept plans. The typical user is 31 years old with a median job tenure of about six months and annual income of approximately $20,000. “These are precisely the workers who have historically been most likely to cash out small retirement balances,” said Tan, a senior investment strategist at Vanguard. “Since its launch, PSN has facilitated approximately 220,000 outbound rollovers for Vanguard participants, with a median transfer of $200 and nearly three-quarters under $1,000.”

Early impact on reducing cash-out rates

In the first 10 months after a job change, cash-out rates for accounts holding less than $1,000 fell below 10% after PSN adoption, compared with about 50% before adoption in the same plans. This dramatic reduction directly addresses the part of the system where leakage has been most severe.

For balances between $1,000 and $7,000, Hahn, head of retirement research at Vanguard, said the effect is more muted. Cash-out rates for this group remain similar before and after PSN adoption, at about 30% to 40% within 10 months after a job change. “Many participants in this range already have alternatives to cashing out, including leaving assets in their former employer plan or rolling them into an IRA,” she said. “Some cash-outs in this range could reflect near-term financial needs, including debt repayment or other household balance-sheet decisions.”

Auto portability substantially reduces cash-outs for small balances, with more muted effects for medium balances

Cumulative cash-out rate for small balances (less than $1,000)

Cumulative cash-out rate for medium balances ($1,000–$7,000)

Notes: The figures use a panel sample of terminated participants from 83 PSN-adopting employer-sponsored retirement plans recordkept by Vanguard who separated between January 1, 2022, and December 31, 2025 and have been terminated for at least 10 months, ensuring sufficient time to observe cash-out behavior. A cash-out event is defined as at least one cash distribution taken within 10 months of termination. This observation window allows the inclusion of several large plans that began auto portability rollovers in December 2024, while cash-out data extend through October 2025. For PSN plans, the pre-adoption period includes participants who terminated at least 10 months before the plan’s PSN adoption date. In contrast, the post-adoption period includes participants who terminated after adoption.

Source: Vanguard calculations.

Network coverage remains limited

Despite promising early results, Tan said that only about 6% of terminated participants with a PSN rollover from Vanguard plans had been successfully matched into a new employer plan as of early 2026. The remaining 94% were in interim IRAs while participants wait for a successful match.

The timing of these matches is particularly important because nearly three-quarters of balances transferred through PSN were below $1,000. For many of these accounts, recurring account-level fees and conservative default investments may erode balances or limit growth while participants wait for a successful match.

“These early results really highlight both the promise and the current limitations of auto portability,” Tan said.

What comes next

Today, only about 3% of U.S. 401(k) plans participate in PSN. As a result, when participants change jobs, their new employer plans are often outside the network, preventing PSN from matching and transferring their balances. Scaling PSN adoption among plan sponsors and recordkeepers would increase the likelihood of a match and shorten the time balances remain in interim IRAs.

Before matching occurs, outcomes depend not only on whether participants cash out but also on how balances are invested and what fees apply. Enabling simple, low-cost default investments for IRA rollovers and minimizing fees for small balances can reinforce the effectiveness of auto portability. Emerging policy initiatives, including the TrumpIRA.gov executive order and its standards for qualifying low-cost IRAs, could further improve outcomes during the transition period.

“Early evidence from PSN points to meaningful progress in reducing retirement leakage, especially for workers with small balances who face the greatest risk at job change,” Tan said. “Broader participation by recordkeepers and plan sponsors, together with lower fees and effective investment defaults during the transition period, could strengthen the benefits of auto portability and help millions of workers carry their savings forward as they change jobs.”