The American workforce’s pattern of frequent job-switching has resulted in an influx of unattended 401(k) retirement accounts, predominantly attributable to short employment durations. The subsequent trail of dormant accounts spanning various employers complicates financial management and increases the likelihood of misplacing these accounts.
As per data from the U.S. Bureau of Labor Statistics, the average US employee sticks with their current employer for just over four years. The scenario is even more fleeting among younger employees. This trend complicates retirement savings management, with employees having to juggle multiple accounts, each having its unique set of rules, fees, and investment options.
A May 2023 report estimated around 29.2 million ‘abandoned’ 401(k) accounts, holding roughly $1.65 trillion, thereby constituting nearly a quarter of all 401(k) assets. The total value of these lost savings is alarmingly equivalent to the GDP of countries like Canada or Russia.
To reclaim these unutilized funds, one should inspect their available old plan statements, which can provide information on where and who established the 401(k).
Job-switching contributing to unclaimed 401(k) assets
Initial contact should be made with the respective company or HR department, or, alternatively, the National Registry of Unclaimed Retirement Benefits can assist in tracking down lost funds.
In cases where old plan statements are not readily available, contacting previous employers or utilizing the Department of Labor’s Form 5500 may help in obtaining the plan administrator’s contact. If this proves unfruitful, reaching out to the Employee Benefits Security Administration, a division of the Department of Labor, could assist with tracing lost retirement accounts. However, bear in mind that these processes can be time-consuming, so start well ahead of your anticipated retirement date.
If all the above steps fail, public databases such as the National Registry of Unclaimed Retirement Benefits, websites like MissingMoney.com, or Unclaimed.org could assist in locating any unclaimed 401(k) assets. Direct inquiries can also be made at former employers or the plan’s administrator.
Upon rediscovering an abandoned 401(k) account, it is recommended to transfer its funds into the current employer’s plan or an Individual Retirement Account (IRA). Before initiating a 401(k) rollover, contemplate the tax implications, potential transfer fees, and available investment options. Lastly, connecting with a financial advisor could help navigate the complexities of account consolidation.
