the_waters_fine.jpgBy Tom Hawkins | June 13th 2025

Sometimes it seems, the universe sends you a signal that you haven’t been wasting your time.

For me, one such signal arrived in the form of a June 2nd, 2025 opinion piece by PensionBee executive Helene O’Brien, as well as industry reporting on comments from CEO Romi Savova, both drawing attention to the participant-unfriendly nature of some safe harbor IRAs, which house the forced-out retirement savings of separated participants with balances less than $7,000.

Safe harbor IRA abuse is a topic I’ve written extensively about for quite some time, and it represents a foundational motivation for our firm’s long-standing focus on retirement savings portability, including the development and deployment of auto portability via the Portability Services Network. But, for quite a long time, it seemed like a lonely position.

PensionBee is Right
In their recent article, a press release and public comments, PensionBee maintains that excessive safe harbor IRA fees, especially when combined with “interest skimming” default investments, can produce sub-optimal retirement outcomes for participants whose sub-$7,000 balances are forced out of their plan via an automatic rollover program.

Most damningly, they suggest that certain safe harbor IRA offerings are so bad that plan sponsors may risk breaching their fiduciary duty to plan participants by utilizing them.

Not Far Enough?
I happen to agree entirely, but if I could venture one criticism of PensionBee’s analysis, it’s that they didn’t go far enough.

Here’s why.

First, their analysis begins with the safe harbor IRA. Fair enough, but we must also consider what happens to participants prior to winding up in a safe harbor IRA, where traditional automatic rollover programs typically result in about 55% of affected participants cashing out entirely, which is much more devastating to participant outcomes than downstream, sub-optimal returns. Our firm has consistently proven that by incorporating pre-rollover education and portability assistance, cashout leakage will be reduced by over 50%, based on solid empirical data that spans more than a decade.

Second, the fee abuse and “interest skimming” is likely worse than PensionBee illustrates. Without going into gory detail here, I laid my case out in a November 2020 article, where my examples were based upon actual data that I uncovered.

Third, while PensionBee cites DOL Private Pension Data to illustrate that there are 29 million defined contribution accounts held by separated participants that are “forgotten” (I have issues with this terminology) it should also acknowledge that there are likely 8.1 million safe harbor IRAs that languish in provider “landfills”, far away from ERISA protections. In my view, this is the population that has grown way too large.

What’s A Plan Sponsor to Do?
To avoid future fiduciary risks, plan sponsors should take a hard look at their automatic rollover programs. Properly structured, these programs should provide a low-cost, short-lived transitional account for small-balance, job-changing participants that will 1) preserve their retirement savings and 2) through auto portability, quickly and easily facilitate consolidation of their modest balances into a current-employer’s active plan or into an existing IRA.

Key features that plan sponsors should look for in a participant-friendly automatic rollover IRA program include:

  • During the pre-rollover “force out” phase, participants are offered one-on-one education about the high cost of cashing out and provided expert assistance in consolidating their balances
  • Participants whose balances are forced out into safe harbor IRAs are offered the same ongoing education and assistance
  • Support for auto portability is incorporated into the automatic rollover program
  • Metrics on cashouts, account consolidations and median duration of safe harbor IRAs are tracked and reported, and are compared vs. industry averages


For more information on how to evaluate and select an automatic rollover / safe harbor IRA provider, download this checklist.

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