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How Automatic Rollover IRAs Can Wear Down Retirement Savings 

The left-behind 401(k) stockpile keeps growing. But some accounts inside it are shrinking.

There is approximately $2 trillion in left-behind 401(k) accounts. A growing share may end up in ‘junk’ IRAs: long-term traps that can drain retirement savings through excessive fees and minimal returns. 

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An estimated 13 million accounts, totaling $43 billion, will sit in automatic rollover IRAs by 2030.

PensionBee’s updated white paper, “How Automatic Rollover IRAs Can Wear Down Retirement Savings” reveals that many Automatic Rollover IRAs fail their intended purpose.

PensionBee’s findings draw from the Employee Benefit Research Institute (EBRI) IRA database, which holds account-level data from 2010 to 2023 on up to 20 million accounts.

In 2025, PensionBee shed light on the systemic problem of Automatic Rollover IRAs, through its landmark report:
“How Junk IRAs Are Destroying the American Dream” 

The intention.

Designed to help employers manage the growing problem of left-behind 401(k)s, Automatic Rollover IRAs are meant to provide a safe, temporary home for small balance accounts. 

The problem.

Expectation does not match reality. Small balances can falter for years in cash-heavy products, as high-fees offset low yield. 

Short-term transitions become long-term stays. 

Investing involves risk. This image visually represents the data compiled from the associated research and is provided solely for informational and educational purposes.

Automatic Rollover IRA volume is growing but exits are rare.

• 87% of Automatic Rollover IRA accounts remain after one year
• 75% remain after three years
• 52% remain after eight years
‍
Our research shows that most accounts never leave their Automatic Rollover IRAs. And each year, more are rolled over. 

2.2 million automatic rollovers are expected by 2030, which is double the 1.1 million in 2022.

Losses start on arrival. And the bills keep coming. 

Retirement savers can be charged opening fees as high as $100 for accounts they didn’t choose when their employers automatically roll them into these IRAs. 

Investing involves risk. This image visually represents the data compiled from the associated research and is provided solely for informational and educational purposes.

Accounts that don’t move struggle to make up initial losses. Many Automatic Rollover IRAs face recurring fixed charges that can erode balances. Modest yields struggle to offset the losses. 

Investing involves risk. This image visually represents the data compiled from the associated research and is provided solely for informational and educational purposes.

Some left-behind accounts lose most of their value. 

EBRI’s data suggests the longer an account stays in an Automatic Rollover IRA, the more likely it is to lose a large share of its value: 
‍
• 25% of value lost: 4.6% in year one to 11.3% by year eight
• 50% of value lost: 2.8% to 8.2% by year eight
• 75% of value lost: 1.8% to 6.1% by year eight

Automatic Rollover IRAs with substantial losses, by years held:

Lost more than 25%
Lost more than 50%
Lost more than 75%
Percentage of original balance lost
14%12%10%8%6%4%2%0%
4.6%
2.8%
1.8%
6.0%
4.0%
2.7%
6.8%
4.9%
3.3%
7.8%
5.7%
4.0%
8.9%
6.5%
4.5%
9.3%
6.9%
4.9%
9.9%
7.3%
5.4%
11.3%
8.2%
6.1%
One yearTwo yearsThree yearsFour yearsFive yearsSix yearsSeven yearsEight years

Years since account was moved to Automatic Rollover IRA

Investing involves risk. This image visually represents the data compiled from the associated research and is provided solely for informational and educational purposes.

An invisible threat

Millions of Americans leave 401(k)s behind each year. But 401(k)s don't always stay where they are left.

• Employers can move left-behind balances between $1,000 and $7,000 out of the plan and into an Automatic Rollover IRA without the owner's consent.
• Approximately one-third of all employment-based accounts have balances of $7,000 or less, leaving them vulnerable if left-behind.  
• Nearly 2 million are expected to be automatically forced out of their plans this year.  

What employees can do today

• Know the risks of leaving behind an account, no matter how small.
• Stay up-to-date on where all accounts are and keep contact information current.
• Consider consolidating your accounts by proactively selecting an IRA home that matches your retirement goals, and track down left-behind accounts before fees erode them.

What employers can do today

• Regularly review partnerships with automatic rollover providers, both to protect former employees and mitigate fiduciary liability under ERISA.
• Prioritize communication during off-boarding and ensure employees know their retirement options.

Images are hypothetical*

What policymakers should consider

• Expand default investment options: Regulatory guidelines should recognize that Automatic Rollover IRAs are typically used as long-term accounts and expand available default options. Moving beyond ultra-conservative cash-like investments to include growth-oriented vehicles, specifically target-date funds, may allow stranded savings to compound over a worker's remaining career.
• Issue explicit provider selection guidance: Regulators must provide plan sponsors with clear, standardized fiduciary guidance on how to evaluate and select Automatic Rollover IRA providers. We need to establish objective benchmarks for fees, account yields, and participant communication.

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