For workers who lose track of their 401(k) savings accounts, help may be on the way. Proposed retirement legislation that’s pending in Congress would create an online “lost and found” database to help locate those accounts, among a variety of other provisions. While lawmakers are in the early stages of considering changes, retirement advocates say the initiative — which also would help people access lost pension benefits — can’t come soon enough.
In recent years, people have found that too many retirees are unable to use their benefits that they earned or saved because they cannot locate them. As more workers change jobs throughout their career — the average is 12 jobs, according to one government study — it’s possible for multiple 401(k) accounts to be left with ex-employers. More than 16 million accounts of $5,000 or less remained in workplace plans from 2004 through 2013, according to a report from the Government Accountability Office.
Most people just assume that the money will be there when the time comes that they need it, however, it’s important to note that there can be lots of changes over time. An employer can go out of business, go bankrupt, or merge with another company, causing these accounts to be lost and never reclaimed.
The provision in the congressional proposal would create an office at the Pension Benefit Guaranty Corp. to oversee and administer the lost and found program. It would accept account transfers of under $1,000 from plans and would try to locate the owner. Individuals also would be able to search the database for contact information for their plan.
“If the company has moved to South Carolina or New Zealand or wherever, or is now Company Z not Company X, the lost and found will have that information,” said Karen Ferguson, president of the Pension Rights Center, a consumer advocacy group.
While we wait for this much needed program to form, those who have lost track of their account should first call their former employer if the company is still in existence. If not, you should try to track down the successor company, if there is one. You also can call the financial institution that was holding the account. While they may not have it anymore and may not have records of where it went, it is still worth a shot in the meantime.
If you have an old 401(k) account or pension you are unable to track down, follow the steps above in an attempt to relocate it. Hopefully soon this new plan pending in Congress progressed in order to help millions across the country stay on top of their hard earned money. If you have any questions about your 401(k) and how to take the next steps if you have started a new job, please let us know at info@shermanwealth.com or schedule a complimentary 30-minute call here.
