At least once every few months a long-term client brings in a retirement account statement and says, “I forgot I had this retirement account. Can you help me with it?”
Sometimes these accounts are tiny but other times they hold a substantial amount of money. All of them are old, and haven’t been looked at in years.
If you find yourself in this position, follow these steps to locating your 401(k) or other retirement accounts from previous employers.
Do you ever feel like you know you saved more for retirement than your statements indicate?
Are you certain you must have forgotten about an old retirement account or pension with a previous employer?
You likely aren’t crazy, and you’re definitely not alone.
The days of graduating college, getting a corporate job and staying with the same employer until the retirement age of 65 are long gone.
Today, people are jumping from job to job which often leaves a trail of old retirement accounts and even a few pensions.
Because of this, a surprising number of people lose track of these old accounts. Forgetting about these accounts can really hurt your overall retirement security when you factor in compounding interest.
While the exact number of “missing” retirement accounts isn’t known, human resources consulting firm AON Hewitt has estimated that as many as 30% of all pension accounts may ultimately fall into the lost category.
This can happen for any number of reasons especially when you think about the numbers of people who move, get married/change their last names and companies that are bought and sold. How much time would you spend keeping up with a $100 per month pension that you may get in 20 or 30 years?
Considering all of this, it’s easy to see how many people lose track of old retirement accounts.
Here are a few tips for those of you who wonder, "Am I missing an old retirement account?"
How to Start Your Search for Lost Retirement Assets
In a perfect world, you would have an old statement or benefit information. But I’m guessing that is not the case if you are still reading this post.
Your first step should be to track down your previous employers. Send them an email or letter requesting information about your accrued retirement benefits. Of course, this will only work if the company still exists.
For those of you who can’t find your former employer, the task can be daunting. However, free help is available from sources like the Labor Department and six nonprofit pension counseling centers. These centers are funded by the US Department of Health and Human Services.
The Pension Benefit Guarantee Corporation (PBGC) also provides help tracking down traditional pensions.
There are also databases that list corporations and bankruptcies.
These databases may be able to help you track down the missing retirement plans because each plan is required to file an annual report form 5500 with the IRS.
If you can track down this form it should contain the plan’s contact information and employer’s identification number.
With this information you can likely track down where the plan is now or who inherited it during a corporate merger.
If your previous employer has terminated its defined benefit pension plan check with the PBGC.
Part of what this agency does is maintain a database of missing participants in the underfunded pension plans it has taken over. Who knows?
You may discover that you’re missing more pension than you remembered. I had one client uncover four missing pensions.
While this discovery isn’t going to make my client rich, it was still a good amount of money that will add up over time. Also, not to shabby for money they didn’t know they had until we looked.
Tracking Down Transferred or Missing Small 401(k) Plan Assets
The search for old 401(k) assets gets extra tricky if your accounts had less than $5,000 in them.
It turns out you may no longer be searching for an old 401(k), but rather an IRA.
Federal law allows retirement plans to transfer balances up to $5,000 to IRA- without additional consent from the participant. While there is no paperwork on the forced rollover, many firms require additional paperwork to update or change your account in any way.
If your old 401(k) was automatically rolled over to an IRA there is a place to look online.
Abandoned Plan Seach is a database of companies that accepts transfers of small balances from 401(k) plans. However, the best place to start your search is the investment company who held the 401(k).
If your old 401(k) was at Fidelity or Vanguard, your IRA is likely at the same company.
What happens when a 401(k) plan is terminated?
According to the U.S. Labor Department, 1,650 401(k) plans are abandoned each year. Was your old 401(k) plan one of them?
Companies terminate 401(k) plans for a variety of reasons.
When they do they are required to transfer all accounts to the plan’s participants.
When they can’t locate a participant, the firm can then send the money to an IRA, a bank or even a state’s unclaimed property fund. While they must attempt to contact you, I wouldn’t rely on this to mean you will actually receive information about the plan closing.
If you think your old account may have been turned over to the state, search the unclaimed database in the state you lived in when you worked for the specific employer. You should also search in the state where the plan’s administrator was located if you worked for a larger or national corporation.
Starting this year, the PBGC will start accepting transfers of missing participant accounts from terminating 401(k) plans. When a participant is hopefully found they will be paid that money plus interest.
Don’t expect the interest paid to even come close to keeping up with average stock market returns.
The search for old retirement assets can be about as much fun as getting a root canal.
The only bright side is that you could end up with more money.
Almost everyone would most likely welcome a little help reaching their retirement savings goals and finding old, forgotten about retirement accounts might help get them get closer to their goals faster.