Auto Portability Updates: What Plan Sponsors Should Know
Learn how auto portability can streamline retirement plan
transitions and minimize plan leakage. Essential insights for
HR and finance leaders in 2025.
Auto portability is the automatic transfer of a participant’s retirement account balance from a previous employer’s defined contribution plan to a current plan at a new employer. The Portability Services Network (PSN) is comprised of a group of retirement plan recordkeepers that are dedicated to creating a secure, nationwide, digital platform for plan sponsors.
What plan sponsors should know:
- Auto portability is only available for retirement plan participant savings balances under $7,000.
- Plan sponsors must adopt auto portability for their plans and participants to utilize the service.
- If a participant leaves their current employer and they are subject to a mandatory distribution from their retirement account, they will receive a legally required notice. The PSN will then search the current employer’s plan for an eligible retirement account for the participant. If an account is found, a consent notice is sent to the participant. And if the participant consents to the transaction, the participant’s retirement account will be automatically rolled into the new employer’s plan.
- PSN utilizes the Retirement Clearinghouse (RCH) solution to deliver the auto portability service. The founding owning members are Alight, Empower, Fidelity, Principal, Vanguard and TIAA.
Auto portability benefits
- Minimizes plan leakage for participants that may be at risk of being cashed out as they change jobs.
- Keeps assets invested so participants don’t miss out on the power of compounding interest.
- Reduces number of missing participants through account consolidation.
- Minimizes costs in the form of lower plan administration expenses.
- Minimizes costs incurred from lost and missing accounts, and any uncashed checks.
- Helps to strengthen participants’ overall financial wellness by preserving retirement savings.
- Helps under-served or under-saved participants, including low-income workers, improve their retirement outcomes.
- Participants, not the plan sponsor, pay for the services only when they are used by the participant.
