New Data Reveals 401(k) Rollover Delays May Net Providers Over $1 Billion a Year

PensionBee Analysis Exposes How Manual 401(k) Rollover Process Profits at Savers’ Expense

NEW YORK, Sept. 18, 2025 (GLOBE NEWSWIRE) -- Every year, millions of Americans attempt to move their retirement savings from one 401(k) to another account. And every year, they hit the same wall: excessive paperwork, long hours on the phone, and a paper check process that routinely delays transfers by weeks or months.

Providers call the system outdated, but what if it’s working exactly as intended? New PensionBee analysis suggests that 401(k) rollover delays are not glitches, but profitable features built into a system generating nearly $1.4 billion¹ annually.

The Cost of Float

During the 401(k) rollover period, funds are typically converted to cash and held by the provider while your savings are in transit. At the same time, they are earning what’s called float income: risk-free interest that accrues to the provider, not you. So while you’re shouldering the risk of being out of market, providers may generate steady, predictable returns throughout the process.

While the “float rate” is rarely advertised, the income generated comes from investing the cash in safe, short-term instruments tied to prevailing short-term interest rates. As the federal funds rate has risen, these returns have grown more substantial, drawing increased regulatory and legal scrutiny.

Using the current federal funds rate as the benchmark, here’s what float income looks like over three typical rollover periods and check sizes:

Table 1: Float Income by Check Size and Rollover Delay

When scaled across the millions² of rollovers processed each year, even modest float earnings translate into substantial aggregate profits. Using conservative assumptions about average rollover amounts and delay periods observed in PensionBee's rollover data, the practice could generate nearly $1.4 billion³ in annual profit from holding savers’ funds in transit.

But while providers quietly earn from these delays, account holders may pay a steep price. Previous PensionBee analysis revealed that inefficient rollovers can cost savers up to $76,000 in lifetime retirement wealth.

The Six-Figure Risk of Being Out of the Market

Even short periods out of the market can erode long-term retirement savings, especially during volatile or rebounding market conditions. Standard 401(k) rollovers typically take two to four weeks when processed efficiently. However, complications frequently extend this timeline to eight weeks or longer, with some cases exceeding three months.

Here’s how much even modest delays can cost⁴, using typical check sizes and rollover periods:

Table 2: 30-Year Impact of Short-Term Market Absence⁵

Gaps in market participation, particularly during periods of volatility, can lock in permanent losses. Even short delays of two to eight weeks can reduce a retirement saver’s balance by tens of thousands of dollars by the time they retire.

In the case of a $100,000 rollover, an eight-week delay during a turbulent market swing could lead to $76,882 in lost returns over 30 years, or more than 75% of the original check’s value.

The Outdated System by Design

There is no universal electronic system to seamlessly move a 401(k) from one provider to another. Instead, every plan administrator has its own forms, rules, and timelines. Common pain points include:

• Lack of standardization: Each employer's plan has different requirements, leading to confusion and long hours on the phone with customer service.
• Paper checks and mail delays: Manual rollovers are common and involve physical checks, despite rising levels of mail fraud.
• Costly deadlines: Participants who receive a check in the mail and wait more than 60 days from their distribution date to reinvest funds with their new provider may be automatically cashed out and subject to steep income tax.

“Better processes and more transparency are much needed in the retirement space,” said Romi Savova, CEO of PensionBee. “It’s far too common to find obstacles at every point of the rollover process, and for many savers, that’s deeply demotivating. It’s easy to understand why. We need a system that works for everyday people in the modern workforce.”

A Better Way Forward

We don’t need to invent new technology to fix the rollover process. The technology already exists. Existing infrastructure, such as the DTCC's ACATS system used for IRA transfers, demonstrates that electronic standardization is technically feasible for 401(k) rollovers.

Reform should start with requiring electronic transfers as the default and setting a strict time limit on rollover completion: no more than 10 business days. Paper checks should be prohibited unless specifically requested, in line with new mandates from the government. Effective Sept. 30, 2025, the Department of Labor will no longer accept paper checks as a form of payment, nor will it issue paper checks as payments. It is taking this action in accordance with Executive Order 14247, which orders federal agencies to transition to electronic funds transfer.

Retirement needs to enter the modern era. As it stands, the 401(k) transfer process reflects a time long gone. The system must evolve to reflect today’s reality, where non-traditional employment, frequent job hopping, and a volatile market are the norm, not the exception.

About PensionBee

PensionBee is a leading online retirement provider, helping people easily consolidate, manage, and grow their retirement savings. The company manages over $8 billion in assets and serves over 275,000 customers globally, with a focus on simplicity, transparency, and accessibility.

Notes

The information provided in this announcement, including any projections for investment returns and future performance, is for informational and educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. PensionBee is not liable for any losses or damages arising from the use of this information. Projections and forecasts are based on assumptions and current market conditions, which are subject to change.

Media Contact
Adela McVicar
SR PR Manager
adela.mcvicar@pensionbee.com

¹ Based on 2025 estimates of $855 billion in annual retail rollovers, a 4.15% annual rate over a two-week holding period generates $1.36 billion in float. Actual profits may be higher, as delays often exceed two weeks and employer-to-employer rollovers are not included. Source: LIMRA, U.S. Retail Retirement Market Forecast, 2025.

² IRS data from 2020, the most recent available, estimates there are 5.6 million annual 401(k) rollovers into IRAs. Total rollover activity, not captured in IRS data, is likely higher.

³ See note 1 for calculation details. Source: LIMRA, U.S. Retail Retirement Market Forecast, 2025.

⁴ PensionBee modeled potential long-term costs using conservative assumptions based on historical market performance: 7% average annual S&P 500 returns (based on 30-year historical averages), 0.85% annual management fee, and compound growth over 30 years. These projections assume continued market performance consistent with historical averages and actual results may vary.

⁵ Losses reflect missed market returns of 6.26%, 8.24%, and 12.83%, respectively, based on real market performance from November–December 2023. The modeling assumes these missed gains are never recovered, a common real-world outcome when accounts are moved out of the market and then re-invested at a higher price.

PensionBee Inc. is registered with the Securities and Exchange Commission as an investment adviser. We do not provide in-person advice. PensionBee Inc (Delaware Registration Number SR20241105406 ) is located on 85 Broad Street, New York, New York, 10004.

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