Now retirement plan participants have a streamlined method to move balances from one 401(k) to another.

Alight Solutions announced this week the launch of an Auto Portability program provided by Charlotte, N.C.-based Retirement Clearinghouse, which will be rolled out to Alight’s client base of 185 defined contribution plans at the end of this year.

“Job losses, furloughs and economic instability are placing a considerable financial strain on American workers and their families, impacting their day-to-day financial situation and their ability to save adequately for retirement,” said Alison Borland, executive vice president of wealth solutions at Alight Solutions, in comments released on Tuesday. “Providing workers with an easy way to move their retirement assets from job to job will allow savers with even modest balances to begin accumulating meaningful retirement savings. We are proud to be the first to adopt this important solution, and encourage employers and other recordkeepers to add this innovation and help workers achieve a secure retirement.”

In a relatively new application of automation to retirement accounts, auto portability defines the routine, standardized and automated movement of a qualified retirement savings account from a former employer’s plan to an active account in a current employer’s plan. The Department of Labor cleared the way for auto portability in guidance published in 2018 and 2019.

Retirement Clearinghouse has been piloting the auto-portability program since 2017, successfully completing its first fully-automated end-to-end transfer of retirement savings from a safe-harbor IRA into a new active defined contribution account in July 2017. Since then, more than 1,600 workers have consented to have their accounts in former employers’ plans transferred into their current employer’s plan.

The new plan feature is launched with hopes of reducing the number of job-changing workers cashing out of their 401(k) plans, which typically leads to income taxes and penalties being applies to their account balances. According to the Employee Benefit Research Institute, $92 billion in taxes and penalties are paid each year due to job-changing workers cashing out of their plans, with black, Hispanic, low-income and younger workers comprising the groups most adversely affected by this phenomenon, which exacerbates an ongoing “retirement crisis” around low retirement account balances.

“Our vision is to dramatically reduce both premature cash-outs and savings depletion from fees charged to stranded, small-balance IRAs by providing an automated method for consolidating workers’ retirement accounts as they change jobs. These goals will be accomplished through the construction of a nationwide, electronic network that connects all employer-sponsored plans,” said Spencer Williams, founder, president, and CEO of Retirement Clearinghouse, in released comments.

Retirement Clearinghouse claims that its portability solutions can cut plan cash-outs by over 50% and help significantly increase average account balances.