Why Automatic Rollovers Are Still an Industry Preferred Solution for Missing Participants | Schwab - Millennium Trust Company

Why automatic rollovers are still a preferred solution for missing participants

August 31, 2023
By Millennium Trust

Missing or non-responsive participants can add to a retirement plan sponsor’s workload and may increase compliance risk. As a plan sponsor, you may be spending a lot of time on your former employees when you want to help your current employees thrive.

Automatic rollover IRAs were created to provide a way for retirement plans to remove costly, small balance accounts of former employees, while preserving the tax-deferred status of their savings.

With an auto rollover service, a plan sponsor can distribute the accounts of former employees from a workplace retirement plan, if the account balance is below a certain dollar amount. Effective January 2024, the dollar amount threshold will increase from $5,000 to $7,000. Plan sponsors can distribute all eligible balances up to the threshold dollar amount.

Balances may be rolled over to an IRA using an auto rollover solution, if the former employee is unresponsive.

Automatic rollovers are still the industry-accepted solution for reconnecting participants with their retirement savings because they benefit both retirement plan participants and plan sponsors. Here’s how:

Benefits for plan sponsors

Automatic rollover IRAs are also called safe harbor IRAs. Plan sponsors are protected by a fiduciary safe harbor when implementing an auto rollover solution. In fact, automatic rollovers are the only missing participant solution that is covered by an explicit Department of Labor (DOL) safe harbor from fiduciary responsibility.

Choice for former employees

Automatic rollovers give your former employees a chance to choose the right path for their retirement assets, including rolling those assets into another IRA or employer plan.

Fighting leakage

Leakage is when someone removes retirement savings from their account for non-retirement reasons. It impacts many Americans’ retirement, causing them to possibly delay retirement or decrease their quality of life in retirement.


Automatic rollovers protect the tax-deferred status of missing participants’ retirement savings, which limits retirement savings leakage. By rolling an employer plan retirement account into an IRA, you could help your former employees continue to save for a better tomorrow.

What to look for in an auto rollover IRA/safe harbor IRA provider

When choosing an automatic rollover service provider, it’s important to think about a few of these things:

  • Automation and execution:An automated and secure online process can make or break your experience.
  • Experience and expertise: You want a pro in your corner, so that accounts keep their tax-advantaged status and meet the safe harbor requirements.
  • Plan sponsor support: A personal point of contact is a big deal.
  • Participant outreach: A provider with a proven track record of finding missing participants is important.
  • Accountholder experience: Former employees should be able to manage their accounts online. They should also have access to knowledgeable client service representatives who have experience in IRAs, are well-trained on IRS distribution rules, and can assist them in multiple languages.
  • Investment options: Accountholders should have access to stocks, ETFs, bonds, CDs, and alternative assets to keep their money working for them.
  • Fair and reasonable account fees: Consider all potential fees, not just the annual fee. Ask questions, including: Is there a low balance fee policy for very small accounts? Who provides the best overall value?
  • No minimum balance requirement: Some providers, Millennium Trust included, can accommodate balances less than $1,000—even when uncashed checks are involved.


Today, automatic rollovers are an easy-to-implement and free solution that’s popular with recordkeepers and plan sponsors. Automatic rollovers can decrease plan sponsor workload, lower plan costs, and help organizations stay compliant. A good auto rollover solution can assist in finding your missing participants, move uncashed checks off your books, and help connect former plan participants with their retirement savings so they can build toward a better tomorrow.


Millennium Trust is a leading provider of automatic rollover services. Learn more about how we can provide a solution for small balance accounts of your missing participants.

The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.

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