A retirement account can lose money without the market doing anything wrong. A white paper released Wednesday puts a number on how often that happens to the small 401(k) balances American workers leave behind when they change jobs: 68% of Automatic Rollover IRAs are worth less after one year than when the money arrived.
The analysis, "How Automatic Rollover IRAs Can Wear Down Retirement Savings," comes from PensionBee, a publicly traded retirement provider that sells account-consolidation services and therefore has a commercial interest in the problem it describes. The underlying numbers, however, come from account-level data supplied by the Employee Benefit Research Institute, a nonpartisan research group.
How Money Moves Without Consent
Automatic Rollover IRAs — also called Safe Harbor IRAs, a vehicle Congress authorized in 2001 — exist so employers can clear small accounts off their 401(k) books without simply mailing a taxable check. If a departing worker's balance falls between $1,000 and $7,000 and the worker does not respond to notices, the former employer can move the money into an IRA at a provider the worker never selected.
The ceiling rose recently. Section 304 of the SECURE 2.0 Act lifted the mandatory cash-out limit from $5,000 to $7,000 for distributions made after December 31, 2023, according to a Milliman client bulletin. Adopting the higher limit is optional for plan sponsors, and the IRS's own participant-facing rollover page still describes the older $5,000 figure.
Most workers do not know any of this. PensionBee found only 35% of people with left-behind 401(k)s understood the money could be transferred without their consent. Most Automatic Rollover IRA owners are 44 or younger — savers with decades of compounding still ahead of them.
Fees Arrive Before Returns Do
The erosion is arithmetic, not misfortune. Opening fees run as high as $100, with monthly maintenance charges around $5 — about $160 in the first year. On a $1,200 balance, that is 13% of the account gone before it earns anything.
What it earns is the second problem. These accounts sit almost entirely in cash-like holdings yielding 0.5% to 2% a year, against the 5% to 8% a diversified 401(k) has historically returned. A $1,000 account earning 1% against those fees runs to zero in roughly 29 years.
"You want this money to grow and be invested in a way that you can take advantage of these returns," EBRI's Craig Copeland told Financial Advisor Magazine.
Time does not heal it. Of accounts still sitting in a Safe Harbor IRA after eight years, 39% are worth less than their starting balance. Severe losses deepen: accounts down 25% or more rise from 4.6% at one year to 11.3% at eight, and accounts down half or more go from 2.8% to 8.2%. Roughly 52% of accounts are still there after eight years — the money is not being reclaimed.
A Growing Pool
EBRI estimates about one-third of workplace retirement balances sit under $7,000 at any given time, which makes the pipeline large and widening. Annual automatic rollovers are projected to double from 1.1 million in 2022 to 2.2 million by 2030, by which point roughly 13 million former employees would hold about $43 billion in these accounts. Industry estimates put more than $2 trillion in forgotten retirement accounts overall.
Part of the cause is ordinary inattention. "Maybe you were auto-enrolled in a 401(k), so maybe you weren't paying attention to begin with. You're changing jobs. There's a lot going on," NerdWallet's Kate Ashford said.
PensionBee CEO Romi Savova framed the remedy as custody rather than regulation: "Millions of Americans have small 401(k)s sitting with old employers, and most have no idea that money can be moved into an account that slowly drains their savings. These accounts should be invested for the long term, like the 401(k)s they came from. The best protection is to find your old accounts and keep them under your control."
Sources: PensionBee white paper "How Automatic Rollover IRAs Can Wear Down Retirement Savings" (October 21, 2026); Employee Benefit Research Institute account-level data; Financial Advisor Magazine; The Hill; Milliman Client Action Bulletin on SECURE 2.0 mandatory cash-out limits; IRS guidance on rollovers of retirement plan and IRA distributions.