Saving for retirement is a long-term undertaking. Staying with the same employer generally isn’t. Changing jobs creates an opportunity for retirement savings to become disconnected from the saver — or spent prematurely. Auto-portability is designed to bridge that disconnect by helping small retirement balances follow workers to their next employer’s plan, without requiring them to initiate every step of the transfer. It offers a practical way to help retirement savings stay connected to the people who earned them.
The SECURE 2.0 Act of 2022 (SECURE 2.0) gave this process a broader statutory foundation and directed the Department of Labor (DOL) to establish additional protections. Whether it fits a particular plan depends on a prudent fiduciary determination, which will be further explored below.
Here’s What You Really Need to Know
- SECURE 2.0 does not require plan sponsors to adopt auto-portability, but it does provide a prohibited transaction exemption for those who do and receive compensation for qualifying transfers.[i]
- The DOL has submitted a final rule for review that would develop the protections included in section 120 (Exemption for Certain Automatic Portability Transactions).
- The proposed rule, published January 29, 2024, includes directives regarding notice delivery, independent audits, correction procedures and restrictions on using participant information for unrelated purposes.[ii]
- The final rule may differ from the proposal and was cleared by the White House on October 20, 2026. The final rule may be issued very soon.[iii]
- For plan sponsors, this opportunity is worth evaluating, including the costs, administrative requirements and fiduciary responsibilities that accompany it.
Let’s Dive In
Much of the retirement plan industry’s attention is understandably focused on getting people into retirement plans and getting them to save more. But saving more won’t accomplish its intended purpose if those savings are repeatedly cashed out along the way. Job changes are a particularly important point at which to make retaining retirement savings easier. Depending on the size of the account balance, the terms of the plan, and the direction (or lack thereof) from the participant, the plan may take different actions.
What is Auto-Portability?
Auto-portability is an optional plan design that, like automatic enrollment, seeks to make rolling over a retirement plan distribution the default, rather than an automatic cash-out, which ends up being the default in most defined contribution plans. SECURE 2.0 codified auto-portability and provided prohibited transaction relief for certain qualifying auto-portability transactions. As with automatic enrollment, the individual receives advance notice and can opt out of the rollover default. The receiving plan must accept the rollover, and the provider must be able to match participant accounts across plans.
What’s a “Force-Out?”
“Force-out” is retirement industry shorthand for a plan’s distribution of a former employee’s small, vested benefit without the employee’s consent. It forces the money out of the plan, but it doesn’t necessarily mean paying it directly to the employee. However, it’s optional for the employer, and a plan can retain small balances or use a lower force-out threshold. The statutory ceiling (increased to $7,000 under SECURE 2.0) doesn’t automatically change the plan’s terms.
The Impact of Auto-Portability
Consider a worker who leaves a job with a $3,000 vested balance. If the former employer’s plan provides for mandatory small-balance distributions and the worker makes no election, that balance ordinarily goes into a default IRA (selected by the plan fiduciary), potentially administered by a provider such as Retirement Clearinghouse. Auto-portability adds a subsequent step: matching the worker with an account in a participating new employer’s plan and transferring the savings there — potentially through an intermediary IRA — following the required notice and opportunity to opt out.
The distinction matters. An automatic rollover gets the money out of the former employer’s plan and into an IRA. Auto-portability gets that money from the default IRA into the worker’s active workplace retirement account. It is not a general authorization to move every former employee’s balance, regardless of size or circumstances.
There are practical limits. A worker may not have another eligible workplace account. A receiving plan may not accept these rollovers, or the necessary recordkeeper connections may not exist. And a worker who affirmatively elects to take the cash can still do so. Auto-portability can help with a specific problem; it does not eliminate every source of retirement savings leakage.
What SECURE 2.0 Supports
Section 120 of SECURE 2.0 addresses a potential conflict: a provider exercising discretion over an IRA transfer also receives compensation for carrying it out. The exemption in Internal Revenue Code section 4975(d)(25), and subject to section 4975(f)(12), permits that compensation when its conditions are satisfied.[iv] The statutory relief became available for transactions occurring on or after December 29, 2023.
Those conditions include a written acknowledgment of fiduciary status, reasonable compensation, advance notice, and an opportunity to opt out, monthly searches for matching accounts, record retention, an annual audit and public information about fees and participating recordkeepers. They establish a framework for transfers initiated without affirmative participant direction.
What Congress Directed the DOL to Do
Congress directed the DOL to issue guidance within 12 months of enactment. Section 120(c) specifies protections addressing participant notices, provider and plan fee disclosures, investment of incoming assets according to the participant’s election or an appropriate default, restrictions on third-party compensation, accurate participant data and limits on its use, audit correction procedures and prohibitions on disclaiming liability for improper transfers.
The DOL proposal, published January 29, 2024, develops those protections. Its details include notice delivery, independent audits and correction procedures, and restrictions on using participant information for unrelated purposes. These requirements are proposed; the final rule may differ.
The exemption also does not relieve plan fiduciaries of their responsibilities in selecting and monitoring service providers. A service being available through a recordkeeper is a starting point for evaluation, not a substitute for it. Fees matter, particularly when the accounts involved are small. So do accurate matching, secure data handling, and a reliable process for addressing mistakes.
What Happens Next
Review at the Office of Information and Regulatory Affairs (OIRA) is a step toward issuance, but it does not establish a publication date or reveal the final requirements. Once published, the rule’s effective date and any transition provisions will need to be reviewed. Meanwhile, the statutory exemption already exists; the DOL’s proposal explains that qualifying arrangements can operate under a good-faith, reasonable interpretation of the law pending issuance of final guidance.
Action Items for Plan Sponsors
- Ask your recordkeeper whether auto-portability is available, which providers and receiving plans it connects with, and what happens when no matching account can be found.
- Review the plan’s small-balance distribution threshold and rollover acceptance provisions with your recordkeeper, third-party administrator (TPA) or counsel. Determine whether amendments or revised administrative procedures are needed.
- Assess the full cost of the arrangement, including IRA maintenance and transfer fees, and determine who bears those costs. Evaluate those charges in relation to the balances involved.
- Examine participant notices, the opt-out process, matching controls, data security, limits on secondary data use, audit results and procedures for correcting improper transfers.
- Document the evaluation and, if adopted, establish a process to monitor the provider and the service, as this is part of a prudent fiduciary’s ongoing review.
- Review the final DOL rule when published for any required changes.
[i] Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, div. T, section 120, 136 Stat. 4459, 5303–08 (2022) (SECURE 2.0 Act of 2022), codified at 26 U.S.C. section 4975(d)(25), (f)(12) (2023); see also 26 U.S.C. section 4975 note (Effective Date of 2022 Amendment; Regulatory Authority), https://www.govinfo.gov/content/pkg/USCODE-2023-title26/pdf/USCODE-2023-title26-subtitleD-chap43-sec4975.pdf.
[ii] U.S. Department of Labor, Employee Benefits Security Administration, “Automatic Portability Transaction Regulations,” proposed rule, Federal Register 89, no. 19 (January 29, 2024): 5624–36, secs. A–D,
https://www.federalregister.gov/documents/2024/01/29/2024-01208/automatic-portability-transaction-regulations.
[iii] Office of Information and Regulatory Affairs, “Pending EO 12866 Regulatory Review: Exemption for Certain Automatic Portability Transactions (RIN 1210-AC21),” Reginfo.gov, Office of Management and Budget and U.S. General Services Administration, received September 14, 2026, accessed October 13, 2026,
https://www.reginfo.gov/public/do/eoDetails?rrid=1532865.
[iv] Internal Revenue Service, Notice 2024-3, “2023 Cumulative List of Changes in Plan Qualification Requirements for Defined Contribution Qualified Pre-approved Plans,” Internal Revenue Bulletin 2024-2 (January 8, 2024): 338, sec. V.1.b, https://www.irs.gov/irb/2024-02_IRB.