Retirement Retirement Planning

Millions of Americans Have Retirement Savings Stuck in 'Junk IRAs'

New research suggests millions of workers may unknowingly have small retirement balances sitting in high-fee rollover accounts called Safe Harbor IRAs.

By Adam Palasciano , Edited by Amanda Machado

Updated April 1, 2026

Add Us On Google

Switching jobs is common, but retirement accounts often get left behind in the process. Over time, these forgotten balances can end up in accounts that quietly drain savings through fees and limited investment options. A new report from PensionBee warns that millions of Americans may have retirement money sitting in so-called "junk IRAs" — accounts that could weaken a long-term retirement plan.

Understanding how these accounts work may help workers locate missing savings and avoid unnecessary losses.

Get a protection plan on all your appliances

Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

A home warranty from Choice Home Warranty could pick up the slack where insurance falls short.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

Why Safe Harbor IRAs are really 'junk IRAs'

Many Americans have retirement savings scattered across old employer plans, particularly when they switch jobs frequently. When workers leave a company and forget about their 401(k) balances, those accounts can become administrative burdens for employers. There are currently nearly 30 million left behind 401(k) accounts in the US.

If the balance is relatively small — generally under $7,000, which reflects about two million left behind 401(k)s — employers may automatically move the funds into a Safe Harbor IRA designed to hold abandoned retirement money. These accounts are meant to preserve savings, but critics say they often come with high fees and conservative investment options that may reduce long-term growth.

According to a recent report by PensionBee, these automatic rollover accounts can erode retirement savings over time, particularly if the balances remain untouched for years. The report describes these accounts as "junk IRAs" because workers may not realize the money exists or understand how fees and limited investment options could erode their savings.

Who really has the cheapest auto insurance in your area? Check your zip code here.

Safe harbor IRAs explained

Safe Harbor IRAs are special retirement accounts created to hold funds that are automatically rolled over from former employer retirement plans. Federal rules allow employers to move small 401(k) balances into these accounts when workers leave their jobs and fail to move the money themselves. Instead of remaining in the employer's retirement plan, the funds are transferred into a separate IRA managed by a financial institution.

The goal is to protect workers' retirement savings rather than forcing them to cash out the funds. However, critics argue that the accounts often lack transparency, can carry higher administrative costs, and provide minimal returns. PensionBee reports that by 2025, about $28.4 billion in retirement savings will sit in Safe Harbor IRAs. By 2030, that figure will grow to about $43 billion.

How safe harbor IRAs can cost you in the long run

The biggest concern raised in PensionBee's research is how fees affect small retirement balances. Even modest annual charges can have a large impact when the account only contains a few thousand dollars.

For example, the report notes that the combination of administrative fees and conservative investment choices may slowly eat away at balances if the accounts remain inactive for years. Because many workers forget about these accounts after changing jobs, the money can sit untouched while costs accumulate.

Get a protection plan on all your appliances

Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

Whether or not you’re a new homeowner, a home warranty from Choice Home Warranty could pick up the slack where insurance falls short and protect you against surprise expenses. If a covered system in your home breaks, you can call their hotline 24/7 to get it repaired.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

Why job switching creates lost retirement accounts

Job mobility is a major factor behind the growth of abandoned retirement accounts. Many workers may change employers multiple times during their careers, and retirement balances from earlier jobs may be overlooked.

If employees fail to roll over the funds or withdraw them, employers will eventually move the money into Safe Harbor IRAs. Over time, this creates a fragmented retirement landscape where workers may have several small accounts scattered across different providers.

How to check for lost IRA money

Workers who suspect they may have lost track of retirement savings have several options to locate those funds. One of the first steps is contacting former employers or reviewing old retirement plan documents.

Several online databases also help individuals locate missing retirement accounts. The U.S. Department of Labor maintains a Retirement Savings Lost and Found Database designed to reconnect workers with forgotten retirement savings accounts.

Additionally, keeping personal records of retirement accounts and consolidating old plans into a single IRA or current employer plan can make it easier to track balances over time.

Steps to prevent more 'junk IRAs' in the future

One way to avoid forgotten retirement savings is to roll over old 401(k) balances whenever you change jobs. Consolidating accounts into one retirement plan may reduce fees and simplify long-term investing.

Workers should also review their retirement accounts regularly and ensure their investments match their financial goals. Monitoring fees and investment performance can help prevent small balances from slowly shrinking over time.

Taking a few minutes to manage retirement accounts after changing jobs may help protect savings that will be needed later in life.

Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why

Bottom line

Safe Harbor IRAs are designed to preserve small retirement balances when workers leave their jobs, but critics say these accounts may come with hidden drawbacks. Fees, conservative investment options, and forgotten balances can slowly erode savings that were originally meant for retirement.

If you've changed jobs multiple times, it may be worth checking whether you have old accounts sitting in automatic rollover IRAs. Finding and consolidating those funds could help strengthen your long-term retirement strategy and avoid money mistakes that might undermine future savings.

More from FinanceBuzz: