According to recent reports, there is approximately $1.6 trillion sitting in “lost” 401(k)-style accounts. These accounts are considered lost or abandoned when an employee changes jobs and the account becomes inactive. The issue is particularly acute for individuals with small accounts, as employers may transfer these accounts with less than $7,000 into IRAs that earn low returns and have high fees, leading to the money wasting away over time.
The problem has been exacerbated by increased job switching in a tight labor market, making it easier for individuals to switch jobs more frequently. To track down abandoned retirement accounts, individuals will need to be patient and conduct some detective work. One option is to contact their old employer, as they are likely to have records of the account if the money was not moved out of the plan. Another option is to check with the U.S. Department of Labor to find plan information through the Department of Labor’s website or locate the company’s Form 5500.
Additionally, individuals can check state records as nearly every state has an agency that tracks unclaimed assets. By searching publicly available databases for unclaimed assets, such as the National Registry of Unclaimed Retirement Benefits and the National Association of Unclaimed Property Administrators site, individuals can see if there are any unclaimed 401(k) funds that belong to them. Finding money in an abandoned account with your name on it can be a satisfying experience as it is essentially found money that can be added to your retirement savings.
Ultimately, the money in these abandoned accounts still belongs to the account holder, even if the account has been inactive for a long time. Employers are allowed to transfer orphan accounts with less than $7,000 into IRAs, but individuals can still claim the money if they track down the account. With various strategies such as contacting old employers, checking with the Department of Labor, and searching state records for unclaimed assets, individuals can potentially locate and claim their abandoned retirement funds, adding to their retirement savings.
Therefore, it is important for individuals who have changed jobs and left behind 401(k) accounts to take the time to search for and claim any abandoned funds they may have. By being proactive and conducting thorough research using the various strategies available, individuals can potentially uncover significant amounts of money that they can use to bolster their retirement savings and secure their financial future. Don’t let your hard-earned money sit idle in abandoned accounts, take the necessary steps to track it down and put it towards a more secure retirement.
