Retirement Retirement Planning

New 401(k) Proposal Could Save Workers Millions In Lost Funds

This will help prevent lost 401(k)s from old employers.

By Catherine Collins , Edited by Kristy DeSmit

Updated April 23, 2026

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In previous generations, it was common for workers to stay at a company for their entire career. Now, workers change jobs frequently for higher pay and better benefits. While this is beneficial in many ways, it makes managing retirement plans more challenging.

A recent white paper from Retirement Clearinghouse proposed that the U.S. create a national 401(k) clearinghouse that would automate the 401(k) rollover process when people switch jobs. The goal would be to help workers keep their 401(k)s retirement plans intact and reduce the amount of money lost to cash-outs.

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The average worker has 12 jobs over a career

Data from the Bureau of Labor Statistics shows that today, workers have 12 jobs over the course of their careers.

This makes it especially challenging for workers to keep track of their 401(k)s and manage them properly. Not only that, but every employer can set their own rules about 401(k) rollovers, cash-outs, and more. That makes the process even more complicated.

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Tens of billions of dollars are lost during job changes

Every time an employee leaves a job, they have several choices. They can cash out their 401(k)s, move them to their new job, or roll them into a self-directed IRA. These choices are often confusing for many Americans, especially during stressful times like leaving a job.

The Employee Benefit Research Institute says that because of people cashing out their 401(k)s during job changes, they collectively lose tens of billions of dollars every year.

What would a retirement clearinghouse do for employees?

The idea for the retirement clearinghouse would be to use technology to ensure Americans do not lose track of their retirement accounts from previous employers.

The system would help workers with the rollover process, rather than putting the responsibility fully on employees to manage their own accounts. It would also make communication clearer and more standard across all employers.

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The challenges to creating a retirement clearinghouse

The main challenge in creating a retirement clearinghouse is that it would require the cooperation of all employers. It would require all 401(k) providers to have uniform contracts, language, and policies for their 401(k) plans when a worker leaves a job.

Though technology can help speed up the process of identifying employer accounts, the act of creating such large-scale industry cooperation could take time to roll out.

Millions of Americans forget about their old 401(k)s

It may seem hard to believe, but millions of Americans leave behind 401(k) accounts at old jobs and completely forget about them.

According to data from Capitalize, there are 31.9 million "forgotten" 401(k) accounts. These accounts altogether have over $2 trillion in assets.

Typically, this happens when workers forget that they enrolled in a 401(k) plan or didn't believe they had enough invested. Once they switch employers, they may not remember how to log into their 401(k) accounts. However, this is money that legally belongs to them, which is why a retirement clearinghouse could help workers recover lost funds.

How workers can protect themselves when changing jobs

When workers switch jobs, the best step to take to protect their hard-earned retirement money is to carefully read all of the exit paperwork from their employer. Vanguard data found that even a 1% reduction in your retirement contribution rates could equate to as much as $300,000 less when it comes time to retire.

Workers should receive instructions on their options when it comes to their 401(k), which includes moving it to a new employer or rolling it over into an IRA. This paperwork can be confusing, so make sure to ask questions if you're not sure how to proceed.

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Where workers can get 401(k) help if they need it

If you're not sure what to do with your 401(k) when you leave a job, consult with a financial planner. A planner can advise you on the best next steps for you, depending on your risk tolerance and retirement goals. They can also suggest brokerage firms where you can move your 401(k) after leaving your old job.

Ideally, do your research or work with an advisor before you decide to switch jobs. The process of moving workplaces can be stressful, and having a plan in place ahead of time for your retirement funds can help.

Bottom line

Every American deserves to have a stress-free retirement one day, but it can be challenging if they cash out 401(k) retirement funds too early.

A Vanguard report found that one-third of workers who change jobs cash out their 401(k)s, which can dramatically impact their retirement account balance in the future. A retirement clearing house would be beneficial to help American employees keep track of their retirement savings and automate the process.

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