Retirement accounts represent the second-largest source of wealth in the United States. Yet when participants change jobs, 89% never complete their account transfers. This creates a cascade of challenges for both participants and plan sponsors.

The State of Retirement Today

The workforce continues to move between jobs more frequently than ever before. Each job change brings mounting challenges. The difficulty of managing multiple investments doubles, while the chances of accounts getting lost or cashed out triples.

Fees on old accounts can quadruple as participants spend 7-10 hours attempting transfers. The average transfer takes 60 days to complete, and plans must pay $72 annually per inactive account.

These challenges affect organizations of all sizes. Plan sponsors face mounting administrative costs while participants encounter significant barriers to long-term financial security.

The Real Cost to Plan Sponsors

The financial impact on plan sponsors includes higher administrative fees from inactive accounts and reduced negotiating power due to lower average balances. Organizations lose opportunities to grow assets under management while spending more on manual transfer management.

The administrative burden weighs heavily on HR teams mediating between providers, managing paper-based transfer processes, and handling manual verification requirements. Valuable time goes to tracking down old accounts and providing basic participant support.

Participant engagement suffers through lower participation rates in retirement plans and reduced contribution levels. This leads to decreased satisfaction with benefits and limits the ability to demonstrate plan value while missing crucial opportunities for financial education.

Why Traditional Solutions Are Inadequate

Current retirement transfer methods reflect outdated workplace patterns. Plan sponsors still rely on paper forms requiring multiple signatures, fax machines for document transmission, and manual account verification steps.

Limited provider communication combines non-standardized transfer processes and minimal participant guidance to create delays. These methods made sense when participants stayed with one employer for decades. Today's mobile workforce requires modern solutions.

Building Better Retirement Outcomes

Participants need real control over their retirement savings. Not delays in transfer times, lost checks in the mail, and broken fax machines.

Plan sponsors should welcome a standard of providing modern solutions that support their employee’s finances. 401(k) transfers should complete in minutes rather than months, with automatic quality checks eliminating manual paperwork, and real-time status updates that keep everyone informed throughout the process (this is what Manifest is building).

Supporting Smart Financial Decisions

When participants receive proper transfer support, cash-outs are reduced, and the creation of accounts with new plans rises, accompanied by better investment management and lower fees on consolidated accounts. These improvements drive increased contribution rates across the board.

Reducing Administrative Work

HR teams need tools that automate quality checks and enable direct provider communication. By removing manual verification steps and tracking transfer progress automatically, teams can focus on strategic work. Proper compliance oversight and automated reporting ensure accuracy without excessive time investment.

Increasing Plan Value

Better retirement benefits deliver measurable results. Plan sponsors can cut overall plan fees by up to 20% while removing inactive account costs. Higher average account balances improve provider negotiations. Clear participant impact supports recruitment goals and demonstrates real value to organizational leadership.

Making Lasting Changes

Plan sponsors can start with a simple assessment of their current state. Note:

  • How many participants are active vs. inactive in the plan
  • Participation, engagement, and contribution rates
  • How much time HR is spending on 401(k) queries from participants

It’s not uncommon for inactive participants to accumulate in plans, for engagement to be low, and for HR to be bogged down with administrative work.

Once employers are aware of their plan’s health, it becomes easier to identify the pain points holding everyone back from maximizing retirement outcomes.

Supporting Diversity, Equity, and Inclusion

Making it easier for employees to save advances DEI goals by supporting younger participants, minorities, women, and participants with lower incomes, who have historically participated less in their 401(k) plan.

New workforce entrants and job-changing participants gain equal access to crucial financial tools at the best time and are empowered to use them without fear of failing to complete an intimidating process.

The Path Forward

Retirement comes for everyone at some point. As an industry, we should recognize this and build to accommodate it.

We’ve seen innovations in retirement come in the form of auto-enrollment, auto-escalation, robo-advising, etc., but there has not been a solution to the problem the manual transfer process is causing today.

We believe improving the portability of retirement accounts can help employers bring in more assets, offload accounts no longer being used, and position them to support their teams.

Ready to improve retirement outcomes? Contact [email protected] to learn more.