# Automatic Portability Linked to Fewer Small 401(k) Cash-Outs

By John Kim

Canonical URL: https://www.tokenpost.com/news/business/45515
Published: 2026-10-31T13:40:18.000Z
Updated: 2026-10-31T13:40:18.000Z
Section: Business

> In 83 plans that adopted the network, cash-outs were less common among workers with under $1,000. Separately, 94% of terminated participants with rollovers from Vanguard-recordkept plans remained in interim IRAs by ea…

Automatic portability was linked to fewer small 401(k) cash-outs in an 83-plan comparison, while most terminated participants with a PSN rollover from Vanguard-recordkept plans remained in interim IRAs by early 2026.

Among participants in 83 plans recordkept by Vanguard, 9% of workers with balances below $1,000 took at least one cash distribution within 10 months of leaving a job when their plans had adopted the Portability Services Network (PSN), compared with 50% before adoption. For balances from $1,000 to $7,000, the rate was 31% after adoption and 39% before.

The comparison looked at participants before and after adoption in the same plans. It was observational, so it does not establish that the network caused the change. The analysis also did not track how workers used money they withdrew.

A separate measure covered terminated participants with a PSN rollover from Vanguard-recordkept plans. By early 2026, about 6% of that group had been matched to a new employer plan; the other 94% remained in interim individual retirement accounts (IRAs). Among those who were matched, the median time from rollover to consolidation into a new plan was about five months.

The network helps locate a worker’s new employer plan and move eligible balances of up to $7,000. In Vanguard’s implementation, a balance first goes to a Retirement Clearinghouse (RCH) Safe Harbor IRA while a match is sought. It can move to a new workplace plan only if that employer’s plan participates. By late 2025, about 3% of U.S. 401(k) plans were enrolled.

Between April 2024 and January 2026, about 220,000 outbound rollovers from Vanguard participants went into RCH Safe Harbor IRAs. The median rollover was $200, and nearly three-quarters were below $1,000. While balances wait for a match, account-level fees and conservative default investments may erode or limit savings.

“These early results really highlight both the promise and the current limitations of auto portability,” said Fu Tan, a senior investment strategist at Vanguard. The cash-out comparison covers Vanguard-recordkept plans and does not establish whether the same pattern holds across all U.S. plans.