Editor's Note: This story originally appeared on NewRetirement.
Finding a lost 401(k) or other retirement account is more tedious than metal detector treasure hunting, but perhaps more rewarding.
A few years ago, I received a strange notice in the mail: a former employer was discontinuing its retirement plan, and I had 30 days to either roll my balance into a different account or receive a (taxable) distribution from the plan. This sort of thing happens quite often when people change jobs and leave their retirement account in the old employer’s plan. The strange thing about this notice was, I had no idea I’d been participating in the plan while I worked there!
Could the same thing have happened to you? If you’re looking for ways to increase your retirement savings, you just may want to look for lost or forgotten retirement accounts.
How many lost 401(k)s and other retirement accounts are forgotten?
Think lost and forgotten retirement accounts amount to chump change? Although no one keeps data on how much retirement money gets lost or forgotten, in an interview with Bloomberg, Terry Dunne of Millennium Trust Co. made “an educated guess based on government and industry data that more than 900,000 workers lose track of 401(k)-style, defined-contribution plans each year.”
That figure doesn’t include pensions. According to the Pension Benefit Guaranty Corporation (PBGC), an independent agency of the U.S. government tasked with protecting pension benefits in private-sector defined benefit plans, there are more than 38,000 people in the U.S. who haven’t claimed pension benefits they are owed. Those unclaimed pensions total over $300 million dollars, with one individual being owed almost $1 million dollars!
Could that money belong to you?
Talk to former employers
Here are three ideas for tracking down a lost 401(k) from a former employer:
Contact former employers
The easiest and most effective method for locating an old lost 401(k) is to contact your former employers. Ask the human resources or accounting department to check their plan records to see if you’ve ever participated in the 401(k) plan. You’ll need to provide your full name, Social Security number, and the dates you worked for them.
Reference an old statement
Because companies reorganize, merge, get acquired, or go out of business every day, it’s possible that your former employer is no longer around. In that case, try to locate a lost 401(k) plan statement and look for contact information for the plan administrator. If you don’t have an old statement, reach out to former co-workers and ask if they have an old statement.
Track down the previous employer via the Department of Labor
If you can’t find an old statement, you may still be able to track down contact information for the plan administrator via the plan’s tax return. Many plans are required to file an annual tax return, Form 5500, with the Internal Revenue Service and the Department of Labor. You can search for these 5500s by the name of your former employer at www.efast.dol.gov. If you can find a Form 5500 for an old plan, it should have contact information on it.
Once you locate contact information for the plan administrator, call them to check on your account. Again, you’ll need to have your personal information available.
Search the national registry and other databases for your lost 401(k)
If you aren’t successful in contacting your former employer or the plan administrator, unfortunately, there is no central database for searching for old retirement assets. You’ll have to try a few places.
National Registry of Unclaimed Retirement Benefits
You may be able to locate your retirement account funds on the National Registry of Unclaimed Retirement Benefits. This registry is a secure search website designed to help both employers and former employees. Employees can perform a free database search to determine if they may be entitled to any unpaid retirement account money. Employers can register names of former employees who left money with them. You’ll need to provide your Social Security number, but no additional information is required.
If your lost 401(k) account was worth more than $1,000 but less than $5,000, your former employer might have rolled the funds into a default participant IRA account on your behalf. Default IRAs can be created when a participant fails to respond to a former employer’s request for pay-out instructions. You can search for 401(k) and IRA accounts for free on the FreeERISA website. Registration is required to perform a search.
U.S. Department of Labor
Even if your former employer abandoned its retirement plan, your money isn’t lost forever. The U.S. Department of Labor maintains records for plans that have been abandoned or are in the process of being terminated. Search its database to find the Qualified Termination Administrator (QTA) responsible for directing the shutdown of the plan.
Lost a pension?
Think you might be missing a pension? The good news is that even if your former employer declared bankruptcy or went out of business, your pension money is protected by the PBGC, which keeps a list of unclaimed pension assets. Pensions are becoming increasingly rare these days, but perhaps your parents or grandparents had one, and your family is owed the balance of an unclaimed pension.
You can contact the PBGC and ask it to look up unclaimed pension benefits by the participant or beneficiary’s last name, or by company or state.
NOTE: California and New York each have $40 million in unclaimed pensions.
A special note for Pennsylvania residents
If you live in Pennsylvania, you should start your search sooner rather than later.
In most states, lost or abandoned money, including checking and savings accounts, must be turned over to the state’s unclaimed property fund. Every state has unclaimed property programs that are meant to protect consumers by ensuring that money owed to them is returned to the consumer rather than remaining with financial institutions and other companies. Typically, retirement accounts have been excluded from unclaimed property laws.
However, Pennsylvania recently changed its laws to require that unclaimed IRAs and Roth IRAs be handed over to the state’s fund if the account has been dormant for three years or more.
If your account is liquidated and turned over to the state before the age of 59.5, you could only learn about the account when you receive a notice from the IRS saying you owe tax on a distribution!
Company 401(k) plans are excluded from the law unless they’ve been converted to an IRA. If you know you have an account in Pennsylvania, be sure to log onto your account online periodically. You can also check the state’s website at patreasury.gov to see if you have any unclaimed property.
What to do with a lost retirement account when you find it
Once you’ve found a lost retirement account, what you do with it depends on what type of plan it is and where it’s located.
Old 401(k) balances can be rolled into your current employer’s plan or rolled into an IRA in a trustee-to-trustee transfer. You can also request a payout of the plan balance, but if you are under the age of 59.5, the payout will be subject to income taxes and a 10% penalty for early withdrawal.
If you find an old pension through the PBGC, you’ll have to go through a process to verify your identity. Once the PBGC has established that you are owed the benefits, you can apply for them at any time once you’ve reached retirement age.
It’s not uncommon for former employees to leave funds in a former employer’s retirement plan, believing they’ll get around to dealing with it later. Years pass, and maybe you’ve forgotten about a few old accounts. Even if they didn’t amount to much at the time, a few hundred dollars here and there combined with some market growth over the years just might add up to a nice addition to your retirement savings. It’s worth a look!
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