It happens to a lot of people: You leave a job with every intention of rolling over your 401(k), but then you get busy with the next thing in your life and that account doesn’t seem so important anymore.
Forgotten 401(k)s can go unclaimed for years, but they’ve become a bigger problem since the pandemic-era Great Resignation.
According to a 2024 report by Capitalize, a company specializing in 401(k) rollovers, about 29.2 million forgotten 401(k) accounts contained $1.65 trillion in retirement savings as of 2023. The company expected those numbers to grow.
“A missing or lost 401(k) is a common occurrence with my clients,” said Jay Zigmont, founder of Childfree Wealth in Mount Juliet, Tennessee, in an email.
He added that he routinely encourages clients to roll over their 401(k) accounts to either their new employer’s plan or an individual retirement account when they change jobs.
“I’ve had clients who searched for months and still did not find their 401(k),” Zigmont said.
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An Outdated Process
While it’s become easy to open individual retirement accounts with a few clicks and transfer money from one institution to another, the process of rolling over a 401(k) remains mostly manual and outdated.
The vast majority of 401(k) rollovers involve a cumbersome process that includes phone calls, physical paperwork and gathering information such as the new custodian’s mailing address. That was daunting for baby boomers, but it’s even worse for younger workers accustomed to fast and easy digital transactions.
According to the Capitalize survey, only 22% of respondents manage to roll over an account without assistance. Another 42% said the process took them two months or more to complete. Over half of savers — 54% — weren’t sure where their old 401(k) was located.
If you or your financial planner believes you may have money waiting for you in an old plan, how should you find it? Here are a few tips.
Contact Your Former Employer
Your former employer’s human resources or benefits department is a good place to start for information about your plan.
“Even if the business was sold, merged or closed, there may still be records of your participation in the plan,” said Lisa Cummings, an attorney at Cummings & Cummings Law, based in Bonita Springs, Florida, in an email.
Your former employer can provide the name and contact information of the plan administrator or let you know if the funds have been transferred to another provider, she added.
“If the company no longer exists, try searching online for news about mergers or acquisitions to find out which company might have taken over the plan,” Cummings said.
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Ask a Friend
The easiest way to find an old 401(k) may be to ask a former coworker, Zigmont said.
“If you have a colleague who is still at your old employer, they may be able to tell you quickly where the company holds their 401(k),” he said.
However, he cautioned, companies sometimes move their plan to a new provider, making it harder to locate.
“Once you know where your 401(k) is, the easiest thing is often just to try logging in or creating a new account on the site. It does not always work, but when it does, it makes everything else easier,” he said.
Search Online Databases
If you know the name of your employer but can’t find any other information that may lead to your 401(k) account, Cummings advises checking the U.S. Department of Labor website.
“Employers who offer retirement plans must file Form 5500 with the Department of Labor each year,” she said. “This form lists key details about the plan, including the name and address of the plan administrator.”
It’s free to search the U.S. Department of Labor’s Form 5500 database to locate former employer mailing addresses and phone numbers.
Zigmont said some of his clients have used Beagle, a company that specializes in finding and rolling over old 401(k)s.
“While Beagle would prefer you move your assets to them, you can use the list of accounts that they found as a starting place,” he said. “Their system often finds old accounts that are closed, but it gives you places to try.”
Call the Plan’s Administrator or Recordkeeper
If you still have old pay stubs, enrollment packets for retirement benefits, annual 401(k) or pension plan statements or even emails from when you worked at the company, look for the name of the entity that managed your retirement plan.
“This could be a large financial services provider such as Fidelity, Vanguard, Alight, Voya or Empower,” Cummings said.
“Once you have the name, call them and provide your personal information to confirm whether they still have your account and how you can regain access,” she said. “The recordkeeping company will need you to verify your identity before they provide information to you to safeguard your account.”
[10 Strategies to Maximize Your 401(k) Balance.]
What to Do When You Locate an Old Plan
If you do find an account from a former employer’s plan, you have several ways to handle it.
“When clients locate their old 401(k) accounts, I help review the full range of options available to them,” said Christine Lam, a certified financial planner at Financial Investment Team in Portland, Oregon. “This includes evaluating plan fees, investment choices, potential tax consequences and how each option fits into their broader financial goals.”.
She noted that the most common actions are either rolling the money into a new employer-sponsored plan or into an existing IRA for simplicity and control.
Plan Rules Govern Small Balances
Lam said her clients often receive an account statement or notice from a plan that indicates there’s a remaining balance.
“Generally, if those balances are under $1,000, the employer has the option to automatically close the 401(k) and issue a check to the participant,” she said.
“When balances are between $1,000 and $7,000, the employer may roll over the balance to an IRA. These mandates are governed by the plan and each 401(k) can have different rules,” Lam added.
That’s why investors should pay attention to even small accounts when they leave a company. Under what’s called the safe harbor provision, employers frequently roll the balances into an IRA that charges monthly or annual asset-based fees.
These accounts may be overly conservative relative to an investor’s goals and time horizon, as the default investments for a safe harbor IRA are typically in very low-risk funds.
Keeping tabs on these balances can help you avoid unnecessary fees and keep your retirement savings on track.
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How to Find an Old 401(k) Account originally appeared on usnews.com
