68% of left-behind 401(k)s that land in ‘Junk IRAs’ shrink after one year

Previous PensionBee research found only 35% of people with a left-behind 401(k) knew it could be moved without their consent.

Rhea-AI Summary

PensionBee (PBNYF) published research finding that 68% of Automatic Rollover IRAs lose value after their first year in these accounts. These accounts receive small workplace retirement balances left behind after job changes. Former employers can transfer balances between $1,000 and $7,000 without the worker’s consent.

The research draws on EBRI account-level data and PensionBee’s analysis. Among accounts still held after eight years, 39% were worth less than their starting balance. Account retention was 87% after one year and 52% after eight years. PensionBee identifies opening fees as high as $100 as a contributor to early losses; most accounts earn 0.5% to 2% annually in cash-like investments. The company recommends contacting a former employer’s HR team or plan administrator to locate transferred savings, which can then move into a current 401(k) or an IRA the saver chooses.

AI-generated analysis. How Rhea-AI works. Not financial advice.

See more from StockTitan in Google Search and AI answers. Adds StockTitan as a preferred source · opens Google

Add on Google Not now

Millions of left-behind 401(k)s may face risks as transfers into Automatic Rollover IRAs snowball

NEW YORK, Oct. 21, 2026 (GLOBE NEWSWIRE) -- Workers who leave a job with less than $7,000 in their 401(k) may have their savings moved into an account they never chose. New research from PensionBee, a leading retirement savings provider, shows most of these accounts start losing value right away.

The new white paper, “How Automatic Rollover IRAs Can Wear Down Retirement Savings,” reveals that 68% of Automatic Rollover IRAs lose value after one year. Of accounts still there after eight years, four in ten (39%) are worth less than when they arrived.

Automatic Rollover IRAs, also called Safe Harbor IRAs, exist to protect small 401(k) balances that workers leave behind when they change jobs. If a balance is between $1,000 and $7,000, a former employer can move it out of the company 401(k) plan and into an Automatic Rollover IRA without the worker’s consent.  The Employee Benefit Research Institute (EBRI) estimates that approximately one-third of workplace retirement balances are under $7,000 at any given time.

“If you contribute to a retirement account, it should still be there when you go looking for it,” said Romi Savova, CEO of PensionBee. “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.”

The findings suggest opening fees as high as $100 are a key reason for early losses in Automatic Rollover IRAs. A $100 opening fee, plus a $5 monthly maintenance charge, adds up to $160 in the first year. On a $1,200 balance, that is 13% of the account gone before it can earn anything back.

Built to be temporary, many accounts stay for years

Automatic Rollover IRAs were designed as a short-term home for balances until former employees claim them. In practice, accounts remain for years:

• 87% of accounts remain after one year
• 75% of accounts remain after three years
• 52% of accounts remain after eight years
  
  

In the meantime, most accounts sit almost entirely in cash-like investments earning 0.5% to 2% interest a year, which may not be enough to keep up with the account’s fees. In contrast, a standard 401(k) can return a historical average of 5% to 8%.

While retirement accounts are expected to grow over time, many Automatic Rollover IRAs sustain significant losses. EBRI’s data suggests the longer balances linger, the more likely they are to lose a substantial portion of their original value.

Share of accounts that lost value, year one vs. year eight:

• Lost 25% or more: 4.6% in year one to 11.3% by year eight
• Lost 50% or more: 2.8% in year one to 8.2% by year eight
• Lost 75% or more: 1.8% in year one to 6.1% by year eight
  
  

Earlier research by PensionBee documented how this combination can deplete smaller accounts entirely to $0. Under one widely used provider’s published fees, a $1,000 account earning 1% would be charged down to $0 in about 29 years, less than the average working life of around 40 years.

Younger workers, who change jobs most often, are especially exposed. Most Automatic Rollover IRA owners are 44 or younger.

How to tell if your old 401(k) was moved

You may have money in an Automatic Rollover IRA if any of these apply to you:

• You left a job in the last 10 years without moving your 401(k).
• Your balance was under $7,000 when you left.
• You have changed your address or email since then.
• You got mail from an IRA provider you don’t recognize, or never heard anything at all.
  
  

To track down an old account, contact your former employer’s HR team or plan administrator. They chose the IRA provider and can tell you where your money went. The U.S. Department of Labor’s Retirement Savings Lost and Found database and your state’s unclaimed property office can also help. Once you find an account, you can move it into your current 401(k) or an IRA you choose.

Many savers never learn their money was moved into an Automatic Rollover IRA. Previous PensionBee research found only 35% of people with a left-behind 401(k) know it can be moved without their consent.

Annual automatic rollovers are projected to double from 1.1 million in 2022 to 2.2 million by 2030. By then, an estimated 13 million accounts holding $43 billion may sit in Automatic Rollover IRAs.

About the Research
The white paper, “How Automatic Rollover IRAs Can Wear Down Retirement Savings,” draws on account-level data provided by EBRI combined with PensionBee's proprietary analysis of market practices and account performance trajectories. All recommendations are those of PensionBee. EBRI was involved only in the analysis of the IRA data, not in the formulation of any recommendations.

For more information on the methodology or to read the white paper, please visit the link here.

About PensionBee

PensionBee (LON:PBEE; OTCQX:PBNYF) is a leading retirement savings provider, helping people easily consolidate, manage, and take control of their retirement savings. The company manages over $11 billion in assets and serves nearly 330,000 customers globally, with a focus on simplicity, transparency, and accessibility. PensionBee offers Traditional, Roth, SEP, and Automatic Rollover IRAs with ETF-backed portfolios. PensionBee is publicly traded on the London Stock Exchange (PBEE) with U.S. shares available on OTCQX (PBNYF).

Notes:
The information provided in this announcement, including any projections for investment returns and future performance, is for informational and educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. PensionBee is not liable for any losses or damages arising from the use of this information. Projections and forecasts are based on assumptions and current market conditions, which are subject to change.

Media Contact:
Adela McVicar
Sr. PR Manager, PensionBee
adela.mcvicar@pensionbee.com

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What did PensionBee find about losses in Automatic Rollover IRAs?

PensionBee’s research found that 68% of Automatic Rollover IRAs lose value after one year. Among accounts still there after eight years, 39% were worth less than when they arrived.

What other tools does PensionBee identify for finding a transferred 401(k)?

The U.S. Department of Labor’s Retirement Savings Lost and Found database and a saver’s state unclaimed property office can help locate an old account. These are additional routes beyond contacting the former employer’s HR team or plan administrator.