Secure 2.0 & Auto-Portability: How Small 401(k) Balances Now Follow You Automatically
Introduction
Job-hopping has become the norm in today's economy, with people changing jobs about every 4 years, often accumulating multiple small accounts scattered among many employers. (Wealth Management) This career mobility creates a massive problem: by mid-career, the typical American has three or more 401(k)s, and many lose track of at least one of them. (Beagle Resources)
The SECURE 2.0 Act of 2022, enacted as part of the Consolidated Appropriations Act, 2023, is changing this landscape dramatically. (IRS Notice) With new provisions raising the automatic rollover threshold to $7,000 and the Department of Labor's proposed regulation on auto-portability set for January 18, 2025, small 401(k) balances can finally follow you automatically from job to job.
But what exactly is automatic, what still requires manual intervention, and when do services like Beagle Financial Services still add crucial value? This comprehensive guide breaks down everything you need to know about the new auto-portability landscape and how it affects your retirement savings strategy.
The SECURE 2.0 Revolution: What Changed for Small Balances
Raising the Automatic Rollover Threshold
The SECURE 2.0 Act includes provisions that address issues such as automatic enrollment in retirement plans, credit for small employer pension plan startup costs, military spouse retirement plan eligibility credit for small employers, and more. (IRS Notice) One of the most significant changes affects what happens to your small 401(k) balance when you leave a job.
Previously, employers could automatically cash out balances under $5,000 when employees left. Now, that threshold has increased to $7,000, meaning more accounts will remain intact when you change jobs. This seemingly small change has massive implications for retirement savers who frequently switch employers.
The Coming Lost and Found Database
SECURE 2.0 with Section 303 is directing the Department of Labor to create a 'lost and found' database for these scattered accounts no later than 2 years after the date of enactment of the act. (Wealth Management) This federal database will help workers locate forgotten retirement accounts, addressing a problem that affects millions of Americans.
Understanding Auto-Portability: The Portability Services Network (PSN)
How the PSN Works
The Portability Services Network represents a groundbreaking approach to keeping small retirement balances connected to active savers. When you leave a job with a small 401(k) balance, instead of that money sitting in a forgotten account or being cashed out, the PSN can automatically move it to your new employer's plan.
The network has achieved impressive scale, with enrollment numbers reaching 15,000 plans and 5 million participants as of 2025. Transaction timelines typically run around 60 days from initiation to completion, providing a systematic approach to account consolidation that happens behind the scenes.
What Qualifies for Auto-Portability
Auto-portability through the PSN focuses specifically on small balances that would otherwise become "stranded" in former employer plans. The system works by:
• Identifying participants who have left their jobs with small balances
• Locating their new employer's retirement plan
• Facilitating automatic rollovers to keep the money actively managed
• Maintaining participant records to prevent future account loss
The Cash-Out IRA Solution
When direct plan-to-plan transfers aren't possible, the PSN utilizes cash-out IRAs as an intermediate step. These accounts serve as temporary holding vehicles that can later be rolled into your active employer plan, ensuring your retirement savings don't disappear into the ether.
The Retirement Account Consolidation Challenge
The Scale of the Problem
The U.S is shifting from defined benefit to participant directed, payroll deducted retirement plans, also known as defined contribution plans. (Wealth Management) This shift, combined with frequent job changes, has created a retirement system where workers accumulate multiple small accounts across different employers.
The Defined Contribution (DC) market, a cornerstone of the US group retirement market, is valued at $10.3 trillion. (Accenture Report) Within this massive market, millions of small accounts sit forgotten, earning minimal returns and charging ongoing fees that erode retirement savings over time.
Industry Consolidation Impact
Retirement recordkeepers in North America are facing challenges such as narrow profit margins, declining fees, and outdated technology platforms. (Accenture) The number of 401(k) national record keepers has decreased from over 120 to 43 in the past 15-20 years, indicating a trend of consolidation in the industry. (Wealth Management RPA)
This consolidation affects participants by potentially making it even harder to track accounts across different recordkeeping platforms, highlighting the importance of both automated solutions and comprehensive account discovery services.
What Auto-Portability Covers (And What It Doesn't)
Automatic Features
The new auto-portability system handles several scenarios automatically:
• Small balance transfers: Accounts under the automatic rollover threshold can move seamlessly between plans
• Cash-out IRA creation: When direct transfers aren't possible, intermediate IRAs maintain account continuity
• Participant tracking: The system maintains records to facilitate future transfers
• Plan-to-plan coordination: Recordkeepers work together to execute transfers without participant intervention
Manual Intervention Still Required
Despite these advances, many situations still require active participant management:
• Larger balances: Accounts above certain thresholds may not qualify for automatic transfer
• Complex account types: Roth 401(k)s, loan balances, and other specialized features may need manual handling
• Investment elections: Choosing how transferred funds should be invested in the new plan
• Beneficiary updates: Ensuring beneficiary information transfers correctly across plans
• Historical account discovery: Finding accounts from jobs held before auto-portability implementation
Where Beagle Financial Services Adds Value
Comprehensive Account Discovery
Beagle Financial Services specializes in 401(k) detective work, using technology to search Form 5500 filings, the National Registry of Unclaimed Retirement Benefits, and other databases. (Beagle Resources) This comprehensive approach goes far beyond what auto-portability systems can handle, particularly for accounts that predate the new regulations.
Beagle is a comprehensive 401(k) search service that helps individuals find all their old retirement accounts they may have lost or forgotten. (Finder) Unlike the automated systems that only work going forward, Beagle can locate historical accounts that have been sitting dormant for years.
On-Demand Consolidation Services
While auto-portability handles future small balances, Beagle also handles the rollover process for easier management of old accounts. (Finder) This includes:
• Active account management: Consolidating multiple accounts into a single, actively managed IRA
• Fee optimization: Moving funds from high-fee employer plans to low-cost investment options
• Investment management: Beagle provides a robo-advisor with automated ETF investing if you choose to roll over your 401(k) to Beagle (Finder)
• Ongoing monitoring: Continuous oversight of your consolidated retirement portfolio
The Concierge Advantage
Beagle's subscription model and automated workflows simplify retirement account consolidation, reduce fee drag, and give users real-time visibility over all their retirement money. Core membership is priced around $3.99 per month and covers account discovery, fee reports, and concierge phone calls to plan administrators.
This human touch becomes particularly valuable when dealing with:
• Complex rollover paperwork
• Unresponsive plan administrators
• Unusual account types or restrictions
• Investment selection and optimization
• Ongoing account monitoring and rebalancing
Comparing Auto-Portability vs. Active Management
FeatureAuto-Portability (PSN)Beagle Financial ServicesAccount DiscoveryFuture accounts onlyHistorical + current accountsBalance ThresholdsSmall balances (~$7,000)All balance sizesTimeline~60 days automaticOn-demand, user-initiatedInvestment ControlLimited to new plan optionsFull IRA investment universeOngoing ManagementNoneActive portfolio managementCostFree (built into plans)$3.99/month membershipHuman SupportMinimalConcierge phone supportFee OptimizationPlan-dependentActively optimized
The Technology Behind Modern Retirement Services
Robo-Advisory Integration
The integration of robo-advisory services has become increasingly important in retirement account management. Performance comparisons show significant variation across providers, with some robo-advisors achieving returns of over 20% in recent periods. (Biallo News)
Beagle's robo-advisory platform provides automated ETF investing for consolidated accounts, offering professional portfolio management at a fraction of traditional advisory costs. This technology-driven approach ensures that consolidated retirement funds receive ongoing optimization rather than sitting in default investment options.
Performance Tracking and Optimization
Modern retirement services utilize sophisticated performance tracking systems. The performance comparison includes more than 150 investment strategies from 16 providers, with data updated monthly and presented before fees and taxes. (Biallo Comparison) This level of transparency and ongoing monitoring represents a significant advantage over traditional employer plan management.
Practical Steps for Retirement Savers
For Current Job Changers
1. Understand your options: Know whether your balance qualifies for auto-portability
2. Document everything: Keep records of all employer plans and account numbers
3. Consider active consolidation: Evaluate whether manual consolidation offers better investment options
4. Monitor transfers: Even automatic systems can have delays or issues
5. Update beneficiaries: Ensure beneficiary information is current across all accounts
For Historical Account Recovery
1. Conduct comprehensive searches: Use services like Beagle to locate forgotten accounts
2. Gather documentation: Collect old pay stubs, tax documents, and employment records
3. Evaluate consolidation options: Compare keeping separate accounts vs. consolidation benefits
4. Consider fee structures: Calculate the long-term impact of account fees on retirement savings
5. Plan for ongoing management: Decide between DIY management and professional oversight
The Future of Retirement Account Portability
Regulatory Developments
The Department of Labor's January 18, 2025 proposed regulation on auto-portability represents just the beginning of regulatory changes designed to address retirement account fragmentation. These regulations will likely expand over time to cover more account types and larger balances.
Technology Evolution
Retirement recordkeepers have been facing challenges for a decade, including thin margins, falling administration fees, and low operating leverage. (Accenture Report) This pressure is driving innovation in automated account management and portability solutions.
Recordkeepers need to adapt by leveraging technology, exploring new revenue opportunities, and enhancing efficiency to meet customer demands. (Accenture) This evolution will likely result in more sophisticated auto-portability features and better integration between different retirement platforms.
Making the Right Choice for Your Situation
When Auto-Portability Is Sufficient
Auto-portability through the PSN works well when:
• You have small balances that qualify for automatic transfer
• Your new employer plan offers good investment options
• You're comfortable with limited investment control
• You don't need ongoing portfolio optimization
• You have simple account structures without loans or special features
When Active Management Makes Sense
Services like Beagle Financial Services become valuable when:
• You have multiple historical accounts to locate and consolidate
• You want access to the full universe of investment options
• Fee optimization is a priority for your retirement savings
• You prefer professional portfolio management and rebalancing
• You need human support for complex rollover situations
• You want ongoing monitoring and optimization of your retirement portfolio
Conclusion
The SECURE 2.0 Act and emerging auto-portability systems represent significant progress in solving the retirement account fragmentation problem. With 15,000 plans and 5 million participants already enrolled in the Portability Services Network, automatic transfers are becoming a reality for many workers with small 401(k) balances.
However, auto-portability is not a complete solution. It primarily addresses future small balances and doesn't help with historical account recovery, investment optimization, or ongoing portfolio management. Personal Capital, now called Empower Personal Dashboard, takes a 'bring-your-own-data' approach, analyzing plans that users already know about. (Beagle Resources)
For comprehensive retirement account management, services like Beagle Financial Services continue to provide essential value through active account discovery, consolidation services, fee optimization, and ongoing portfolio management. Users can roll multiple accounts into a single managed IRA, view all balances in one dashboard, and borrow up to 50% (max $50k) of their retirement balance at 0% net interest with up to five-year terms.
The key is understanding what's automatic under the new regulations and what still requires active management. By combining the benefits of auto-portability for future accounts with comprehensive services for historical account recovery and optimization, retirement savers can finally achieve true portfolio consolidation and ongoing professional management.
Whether you rely on automatic systems or choose active management services, the most important step is taking action to locate, consolidate, and optimize your retirement accounts. With the new regulatory framework and improved technology solutions, there's never been a better time to take control of your scattered retirement savings and put them to work more effectively for your future.
Frequently Asked Questions
What is the new $7,000 auto-rollover threshold in SECURE 2.0?
SECURE 2.0 raised the automatic rollover threshold from $5,000 to $7,000, meaning employers can now automatically roll over 401(k) balances up to $7,000 when employees leave. This helps prevent small accounts from being left behind and reduces the number of "stranded" retirement accounts that workers lose track of over time.
How does the Portability Services Network automatically move 401(k) balances?
The Portability Services Network is a system that automatically transfers small 401(k) balances from former employers to new employer plans when workers change jobs. This network operates behind the scenes to ensure retirement savings follow employees seamlessly, reducing the administrative burden on both workers and employers while preventing account leakage.
Why do people accumulate multiple 401(k) accounts?
People change jobs about every 4 years in today's economy, often leaving behind small 401(k) accounts with former employers. By mid-career, the typical American has three or more 401(k) accounts, and many lose track of at least one of them. This job mobility creates scattered retirement savings that can be difficult to manage and track.
When would I still need Beagle's services despite auto-portability features?
Beagle's concierge services remain valuable for accounts above the $7,000 threshold, complex rollover situations, or finding accounts that predate the auto-portability system. Beagle specializes in 401(k) detective work, using technology to search Form 5500 filings and the National Registry of Unclaimed Retirement Benefits to locate lost accounts that automatic systems might miss.
What is SECURE 2.0's lost and found database requirement?
Section 303 of SECURE 2.0 directs the Department of Labor to create a comprehensive "lost and found" database for scattered retirement accounts no later than 2 years after the act's enactment. This centralized database will help workers locate forgotten 401(k) accounts from previous employers, addressing the growing problem of lost retirement savings.
How has the 401(k) recordkeeping industry changed recently?
The 401(k) recordkeeping industry has undergone significant consolidation, with the number of national record keepers decreasing from over 120 to just 43 in the past 15-20 years. This consolidation is driven by thin margins, declining fees, and the need for greater operational efficiency, while the overall defined contribution market has grown to $10.3 trillion.
Sources
2. https://www.accenture.com/us-en/insights/capital-markets/reinventing-retirement-recordkeeping
3. https://www.biallo.de/robo-advisor/news/beste-robo-advisor-2024/
4. https://www.biallo.de/vergleiche/robo-advisor/
5. https://www.finder.com/retirement/beagle-review
6. https://www.irs.gov/pub/irs-drop/n-24-02.pdf
9. https://www.wealthmanagement.com/rpa-news/independent-401-k-record-keepers-offer-alternatives