Do you have an old retirement account left with a former employer? That's called a Lost 401(k). Maybe it's been so long that you can't even remember where it is. With over 24 million "forgotten" 401(k) accounts that hold roughly $1.35 trillion in assets, even the most organized professional may be surprised to learn of their unclaimed "found" money.1
What are "Forgotten" Retirement Accounts?
Looking at baby boomers, they alone have worked an average of 12 jobs over their lifetime. Considering that, it can be all too easy for retirement accounts to get lost in the shuffle of day-to-day life.2 Think back to your first job. Do you remember what happened to your work-sponsored retirement plan? If you're even a little unsure, then it's probably time to go looking for your potential "forgotten" funds.
Types of Retirement Plans
Before we get into your search, let's review the various types of work-sponsored retirement accounts. By no means is this an exhaustive list, but the following are the most commonly-found retirement accounts.
- 401(k) - This is a company-sponsored retirement plan that allows employees to contribute a portion of their wages to individual accounts. Some employer plans automatically enroll new employees, so it's possible you may have contributed money without being aware of it.3
- 403(b) - This is a retirement vehicle offered by public schools and certain 501(c)(3) tax-exempt organizations. Just as with a 401(k) plan, a 403(b) plan lets employees direct some of their salary into individual accounts. The deferred salary is generally not subject to federal or state income tax until it's distributed. If you've ever been employed by a public school, college, university, church, or non-profit, you may have been offered a chance to participate.4
- Defined Benefit Plan - Sometimes known as traditional pensions, which promise the participant a specified monthly benefit at retirement. Often, the benefit is based on factors such as the participant's salary, age, and the number of years worked for the employer.5
Once you reach age 72, in most cases, you must begin taking required minimum distributions from your 401(k), 403(b), or other defined-contribution plans. Withdrawals from defined-contribution plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
Beginning Your Search
One of the best ways to find lost retirement accounts is to reach out to your former employers. If you're unsure of where exactly to direct your call, the human resources or accounting department should be able to check their plan records to see if you were ever a participant. Be aware, you will most likely be asked to provide your full name, Social Security number, and the dates you worked, so make sure you're prepared to answer those questions.
If your former employer is no longer in existence, look for an old 401(k) statement. Frequently these will have contact information for the plan administrator. If you can't locate an old statement, consider reaching out to former coworkers who may have the information you're looking for.
Even if these first steps don't turn up as much as you hoped, they can help you gather important information.
Websites to Check
Next, it's time to take your search online. Make sure you have as much information on hand as possible and give the following resources a try.
National Registry of Unclaimed Retirement Benefits - This database uses employer and Department of Labor data to determine if you have any unpaid or lost retirement account money. Like most of these online tools, you'll need to provide your Social Security number, but no additional information is required.6
FreeERISA - If your forgotten account was worth more than $1,000 but less than $5,000, it might have been rolled into a default traditional Individual Retirement Account (IRA). Employers create default IRAs when a former employee can't be located or if they fail to respond when contacted. You can search for 401(k) and IRA accounts for free using this database, but registration is required.7
The U.S. Department of Labor - Finally, the department of labor tracks plans that have been abandoned or are in the process of being terminated. Try searching their database to find the Qualified Termination Administrator (QTA) responsible for directing the shutdown of the plan.8
Once you've found your lost retirement account, what you do with it depends on the type of plan and where it's currently held. Your location matters as well. Depending on where you live, rules and regulations may differ.
No matter what you decide to do, be sure to involve your tax and financial professionals since they'll be informed on current regulations for your state. They can also help you identify a strategy for your newfound money: travel, investment, or maybe that vacation home you've always wanted. You worked hard for that money, after all, so you should get to enjoy it!