After working for an employer for several years, employees often move on to find new jobs. Thinking that they will move their retirement account after getting that new job, many neglect to do so and it sits there completely forgotten until years later.
Many retirees today, meanwhile, have not adequately saved enough money for a comfortable retirement. But if they had all the money in their forgotten retirement savings accounts, it could change their situation. Capitalize estimates that as many as 29.2 million 401(k) accounts have been forgotten—estimated now to be worth $1.65 trillion in assets.
Tracing the location of an old 401(k) can be difficult because your old employer may no longer be in business or may have been bought by another company and now operates under a new name. You may not even remember the official name of the company you worked for years ago.
Even though you may have forgotten about the old 401(k), it has continued to collect interest. The service company may take out monthly service fees to maintain the account, but if you have left it alone for years, it probably has much more money than you might imagine.
Check With Your Old Employer
The first place you want to look is your old employer—if possible. If you have not moved, you should receive statements about the account. It will have the necessary contact information on them. If you have moved and never updated your contact information, you can talk to the human resources office at your old employer, and they will attempt to learn what they can about the account. If that does not work, NerdWallet says that if you have the statements, you should contact the company that handles the accounts. The plan administrator will be able to help you.When a former employer still has your account, they must keep it there if it has more than $7,000, or they can roll it over into a different retirement account. A plan administrator has more options. If it is less than $1,000, they will often write a check to you. If it is between $1,000 and $7,000, they can put it into an individual retirement account (IRA) without your approval.
Other Ways to Learn About Old 401(k)s
You can easily find old 401(k)s and other retirement accounts using your Social Security number. The Department of Labor has been working to create a new database with old 401(k)s and other retirement accounts in it. The purpose of it is to enable people to get all their retirement money.The database was meant be ready for use by Dec. 24. However, the Employee Benefits Security Administration (EBSA), a part of the Department of Labor, only contacted account administrators for information in November of this year. Plan administrators can voluntarily submit information to the organization.
The National Registry of Unclaimed Retirement Benefits
The government previously created the National Registry of Unclaimed Retirement Benefits (NRURB) to help people find old retirement plans. PenChecks Trust runs the site. Plan sponsors can register old accounts at no cost to them, and it is free for people looking to claim their old accounts. You only need to enter your Social Security number—without creating an account—and it will reveal whether you have any accounts listed.What Not to Do With an Old 401(k)
Once you find an old 401(k), you might be tempted to pull the money out of it. Avoid doing this if there is considerable money in the account. You have 60 days to put the money into another account, or it could be considered an early withdrawal.
If you are not yet 59½, Fool says that you will have to pay a 10 percent early withdrawal penalty fee and taxes on all the money withdrawn. As an example of how these penalties could affect your savings, Fidelity reveals that if you have $50,000 in a retirement account and are not yet 59½, you could lose as much as $20,500 between state and federal taxes and a 10 percent penalty fee.
Even if you plan on putting the money into another account, it is safer to refrain from withdrawing it. Instead, ask the plan administrator to transfer the money directly into the other account. You also need to know that if you perform a rollover into certain Roth accounts, you must pay taxes on all the money rolled over because contributions those accounts are after tax.
5-Year Waiting Period
You also need to know that if you open a new Roth IRA or a Roth 401(k), you will have to wait five years before withdrawing the money without a penalty. Investopedia says that if you already have a Roth account, the five-year period starts from when it was opened for all other Roth accounts.Other Benefits of the EBSA
Besides providing help locating old retirement accounts, the EBSA also helps people with other workplace issues, whether employed there now or not. They can help with health coverage matters (including COBRA), preauthorization of health treatments, locating people with unclaimed pensions, and more.If you find that EBSA has your retirement funds under its care, you can learn more about filing a claim at its website. It will require that you give EBSA up to 90 days to respond to your request.
The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
