About half of 401(k) plans force out separated participants with balances, according to the study, which examined forced-transfer IRA account data from 10 providers with 1.8 million forced-transfer accounts totaling $3.4 billion between them.

Based on data from one of the larger providers, the GAO estimated $1.5 billion in forced-transfers are made annually.

The report examined 19 different cost structures with forced-transfer IRAs. Under many of the scenarios, a balance of $1,000 would be reduced to $0.00 after sitting in the IRAs for 30 years.

While not all of the scenarios examined resulted in a complete depletion of assets over 30 years, the report said what growth some IRAs did generate would be less than the returns if the $1,000 had been invested in a typical target-date fund.

The report also notes, and takes exception with a provision that allows sponsors to disregard rolled-over assets in an account when determining whether or not to force a rollover.

So an account with $20,000 total–$16,000 was rolled into from previous accounts, and $4,000 came from new contributions—could be eligible for a force out.

The loss to participants is even greater in such a scenario. An account with $19,500 that was left in a 401(k) and invested in a TDF would earn $80,000 over 30 years.

But the returns on the assets in a forced-transfer IRA are nominal compared to that, even under the most optimistic scenarios.

Other countries have more efficient ways of addressing inactive accounts, according to the GAO's findings.

In Australia, for example, small, inactive funds are held by a federal agency that preserves their real value. The Netherlands and Denmark have registries that provide a single source of information on tracking old and new retirement accounts.

The GAO recommends Department of Labor convene a task force to explore the possibility of a similar national registry in the United States.

It also recommends the law be amended to permit alternative default investments when transferring accounts, and repealing the provision that allows sponsors to discount rolled-over assets in an account, and only count contributions to determine if the assets fall below the $5,000 threshold.

In a letter to the Senate Committee on Education, Workforce and Income Security, Phyllis Borzi, assistant Secretary of Labor, disagreed with the GAO's recommendation to expand default investment options for forced transfers.

She suggested other investment instruments, such as qualified default investment alternatives available in 401(k) plans, could expose the assets to undue risk.

She also suggested the GAO failed to consider historically low interest rates when assessing the productivity of the IRAs forced-transfers are rolled into.

The Social Security Administration also took exception with the GAO's recommendation that information on all retirement accounts be provided in Social Security earnings and benefit statements.

"Requiring SSA to provide information on potential entitlement to private retirement funds could create the belief that private retirement and Social Security benefits are somehow connected," according to a memo from the office of the Commissioner of the SSA.