Automatic 401(k) Rollovers Cut Cash-Outs, but Few Reach New Employer Plans, Research Finds

According to CNBC, Vanguard research found that automatic 401(k) rollovers reduced cash-outs among workers leaving jobs, but only 6% of accounts transferred to interim IRAs had reached a new employer plan as of early 2026. Among workers with balances below $1,000, the share who cashed out within 10 months fell to about 9% from roughly 50% after their employers joined the Portability Services Network. For balances of $1,000 to $7,000, the share fell to 31% from 39%. The network generally moves small balances into safe harbor IRAs and then into a new employer’s 401(k) if that employer also participates; few employers have opted in. Since its November 2023 launch, the network has completed 53,118 transfers totaling $71.3 million, according to Steve Holman of Retirement Clearinghouse.