Auto-Rollovers That Cut Plan Costs, Not Retirement Savings
We find former employees with small 401(k) balances, handle every notice and step, and roll their savings into a Safe Harbor IRA in their own name. Your plan gets leaner and less expensive to run, and their money keeps working toward retirement.
Small Balances, Big Costs
Former employees with small balances often stay on a 401(k) plan for years. Each one adds per-participant fees, statements to mail, addresses to track down, and administrative work, while no new contributions come in.
SECURE 2.0 lets plans automatically roll out balances up to $7,000, up from $5,000, if the plan document allows it. Many plans must adopt their SECURE 2.0 amendments by December 31, 2026, so now is the natural time to decide whether the higher limit makes sense for your plan.
A Real-World Example
What you can save
Here’s how the numbers work for a hypothetical plan with 10,000 participants and $700 million in assets, where 2,500 former employees have balances under $7,000 and are rolled off the plan.
Note: This is a hypothetical example for illustration only. Actual savings depend on your plan’s fee structure, recordkeeper agreement, and participant data.
2,500 fewer plan participants
Small-balance former employees, who hold about $12 million in combined assets, are rolled off the plan and into IRAs in their own names. The plan keeps about 98% of its assets while shedding 25% of its total participants.
$62,500 saved on per-participant fees
At $25 per participant per year, the plan stops paying for 2,500 accounts for former employees who will be moved to their own IRAs with a different custodian.
$92,800 saved on asset-based fees
A healthier mix of active participants vs total plan participants strengthens the sponsor's hand in fee negotiations with their recordkeeper. In this example, we assume the asset-based fee drops from 0.20% to 0.19% going forward for the remaining 7,500 participants on the plan.
$155,300 lower annual plan cost in total
Rolling 2,500 low balance former employees off the plan and into their own IRAs will shave about 9.4% off the total annual cost of the plan, every year going forward.
Savings beyond the fee schedule
Streamlining your plan can have additional benefits beyond the headline cost savings, allowing your team to be more efficient while also reducing your plan costs.
Stay under the audit threshold
Plans with 100 or more participants with account balances generally need an independent audit each year. Rolling off small inactive accounts can help keep a plan below that line, avoiding an expense that often runs into the thousands of dollars.
Fewer missing participants
Former employees who change addresses become hard to find, and keeping track of them is part of a plan fiduciary’s job. Fewer small, inactive accounts means fewer people to lose.
Less paperwork every year
Fewer statements, notices, returned mail, and records to maintain.
A plan built for active employees
Your plan’s time and money go toward the people still building their retirement with you. Streamlining your plan allows more time, effort, and money to be used to help current employees build their wealth and plan for retirement.
Former employees benefit as well
Rolling a participant off the plan doesn’t take away their retirement savings. It moves those savings into an account that’s entirely theirs.
Their savings stay retirement savings
A rolled-off participant's balance moves directly into an IRA in the participant’s name, so the rollover itself doesn’t trigger taxes or early-withdrawal penalties the way a cash-out check can.
Notified before anything moves
Every participant that will be rolled off receives the required notice explaining their options. They can choose to roll their balance somewhere else instead at their own directing.
Increased optionality
A participant who has their balance rolled into an IRA is then free to invest their retirement savings in any product of their choosing (ETFs, individual stocks, mutual funds, etc), not just the ones that were offered by your plan.
Free to take it with them
Participants can later move their IRA into a new employer’s plan or another IRA of their choosing.
Why plan sponsors work with Todays Pension
Works with any recordkeeper
Our data platform works with your existing recordkeeper and payroll systems. No switching required.
Accurate data from the start
Eligibility to be rolled off depends on clean participant data. Our platform checks and validates all of your participant data before anyone is contacted.
One partner, end to end
Analysis, location searches, notices, and transfers, all handled by one team.
How it works
We manage the full process from start to finish.
Review your plan data
We analyze your participant data to identify terminated participants with vested balances eligible to be rolled over under your plan’s rules.
Locate participants
We verify current addresses so notices reach the people they’re meant for.
Send required notices
Participants receive their IRC §402(f) notice notifying them of the rollover and explaining their options and the time they have to choose.
Complete the rollovers
Balances for participants who don’t choose to move their funds on their own are transferred to Safe Harbor IRAs at our partner custodian.
Keep your plan streamlined
If you want our continued help, our subscription service scans your plan on a recurring basis and processes participants who are newly eligible to be rolled off your plan, so small balance accounts of former employees don’t pile up again.
Auto-rollover Questions, Answered
What is a 401(k) auto-rollover?
An auto-rollover moves a former employee’s small 401(k) balance off of the plan and into an IRA in their name when they otherwise haven’t told the plan what to do with it. It’s sometimes called a force-out or mandatory distribution.
Which participants are eligible?
Generally, former employees whose vested balance is above $1,000 and at or below your plan’s limit, which can be up to $7,000 under SECURE 2.0. Balances of $1,000 or less may be paid out directly instead of being rolled over. Your plan document must include an automatic distribution provision.
Does our plan need an amendment to use the $7,000 limit?
Yes. The higher limit is optional and must be adopted through a plan amendment, unless this has already been done. Many plans must adopt their SECURE 2.0 amendments by December 31, 2026.
Do former employees lose their money?
No. Their full balance moves into an IRA in their own name, where it stays invested for retirement. They can move it to a new employer’s plan or another IRA later, at their discretion.
What’s a Safe Harbor IRA?
A Safe Harbor IRA is an individual retirement account set up to receive automatic rollovers. It must meet Department of Labor requirements, including investments designed to preserve principal.
What if a participant wants something different?
Every participant receives a notice explaining their options before anything moves. If they choose a different option, such as a rollover to a new employer’s plan or an IRA they pick, that choice comes first.
Does this work with our recordkeeper?
Yes. Our platform works with any recordkeeper and payroll provider.
Is this a one-time project or ongoing?
Either. Many sponsors start with a one-time cleanup, then add our subscription service to process newly eligible participants on a recurring basis since it can provide continuous cost savings.
Find out how many eligible small balances are on your plan
Talk to us about your plan, and we’ll walk through how many participants may qualify and what an auto-rollover program could save you.