As traditional 401(k) plans continue to fall short in closing the $4 trillion retirement savings gap, portable retirement plans (PRPs) are changing the game for both employees and employers in today’s flexible workforce.

The PRP is specifically designed to target small businesses and gig workers—the very groups the current retirement system has left behind. With 81 million Americans lacking access to employer-sponsored retirement plans, the PRP offers a simpler, more affordable solution that meets the needs of today’s dynamic workforce.

Traditional 401(k) plans are costly, complex, and out of reach for many small businesses, with only 30% of employers offering them and 60% eventually discontinuing them due to regulatory burdens.

The PRP eliminates these challenges, including the cumbersome rollover process required when changing jobs, which prevents the $100 billion in annual cash-outs and addresses the $1.3 trillion in lost or abandoned 401(k) funds.

Icon, a retirement technology company, is stepping up with a solution for today’s evolving workforce. The company recently announced a $9 million funding boost to accelerate the nationwide rollout of their PRP, which already has customers in all 50 states. Employees can seamlessly retain their accounts and continue contributing through new employers or independently, while Icon’s one-click rollover technology makes consolidating old 401(k) plans effortless.

We spoke to Icon CEO Laurie Rowley about why outdated 401(k) plans contribute to the $4 trillion retirement gap and how portable retirement solutions are changing the game for both employees and employers in today’s flexible workforce.

Q: How are traditional 401(k) plans falling short in closing the $4 trillion retirement savings gap?

A: The traditional 401(k) was created during an era when large corporations dominated the workforce and could provide the resources to manage these plans. Originally designed as a supplement to pensions, 401(k) plans were not built for today’s workforce or for small- and medium-sized businesses (SMBs). For many SMBs, the compliance requirements, fiduciary responsibilities, and high costs associated with a 401(k) plan make it inaccessible. As a result, nearly half of the U.S. workforce lacks access to a retirement plan. The 401(k) system struggles to adapt to modern business needs and to provide adequate coverage, leaving a significant gap in retirement readiness.

Q: How are portable retirement solutions changing the game for both employees and employers?

A: Portable retirement solutions like the PRP by Icon are ushering in “Retirement 3.0,” a new era in which retirement plans are flexible, mobile, and accessible for both employees and employers. For employees, portable plans mean they own their retirement savings from day one, eliminating the need for complex rollovers when changing jobs. This gives employees more control and helps them stay on track with their retirement goals, regardless of where their career takes them. For employers, especially SMBs, these plans remove the administrative burden, legal risk, and high costs associated with traditional 401(k)s, allowing them to offer retirement benefits without taking on the role of plan sponsor. Portable solutions simplify retirement for everyone involved.