An astonishing $1.6 trillion is currently sitting in “lost” 401(k)-style accounts, left inactive and unused when employees switch jobs. These accounts, often abandoned by individuals with small balances, are transferred by employers to IRAs with low returns and high fees, causing the money to go unused over time. The issue has been exacerbated by the increase in job switching, as the tight labor market allows employees to easily move between employers.
To track down abandoned retirement accounts, individuals can employ several strategies that require patience and sleuthing. One option is contacting their old employer directly to inquire about the status of their 401(k) plan. Employers are required to keep records of employee benefits, and they should be able to provide information on whether the account is still active. Another approach is to check with the U.S. Department of Labor, which requires companies offering retirement plans to file paperwork. By locating the company’s Form 5500 report, individuals can find contact information for the plan administrator during their employment.
In addition to contacting old employers and checking with the Department of Labor, individuals can also search for abandoned retirement accounts through state records. Most states have agencies that track unclaimed assets, and publicly available databases such as the National Registry of Unclaimed Retirement Benefits and the National Association of Unclaimed Property Administrators site can be useful tools for locating lost funds. By entering their Social Security number, individuals can quickly determine if there are any unclaimed 401(k) funds that belong to them.
Locating abandoned retirement accounts not only provides individuals with found money that can be added to their retirement savings, but also ensures that they are not missing out on funds that rightfully belong to them. As the issue of lost 401(k) accounts continues to grow, it is important for individuals to take proactive steps to track down and claim any funds that have been left behind in inactive accounts. With the right strategies and resources, individuals can successfully locate and reclaim their abandoned retirement funds, ultimately strengthening their financial security in retirement.
