By Marc C. Shaffer
Did you know that $1 trillion in retirement savings is estimated to be unclaimed due to job changes, company closures, or outdated contact information according to research from Capitalize?
I’m always surprised when a new client meets with us a few months after engagement and asks why we didn’t consolidate a past employer-provided retirement plan account.
Although consolidation isn’t always our recommendation, the point is clear: many people struggle to keep track of their investment accounts when they are spread across different custodians.
It is hard enough to stay on top of the ones you know about, let alone the ones that have slipped off your radar. Changing jobs, moving to a new city, or going through life transitions often means juggling a lot of details. In the shuffle, old 401(k) retirement accounts sometimes get forgotten. If you are not actively checking on them, there is a good chance they are sitting untouched, out of sight and out of mind.
Fortunately, there is now a simple way to bring those accounts back into focus.
As part of the SECURE 2.0 Act, the Department of Labor has launched a new tool called the Retirement Savings Lost and Found Database. It was designed to help people track down old retirement accounts they may not even realize are still out there.
This is a resource worth exploring:
How the Tool Works
The Retirement Savings Lost and Found Database allows you to search for old 401(k) plans and defined benefit pensions that are connected to your Social Security Number. It covers plans that were sponsored by private-sector employers or unions.
It does not include IRAs, government retirement plans, or Social Security benefits, but it is still a powerful way to uncover assets that might otherwise be forgotten.
To use the tool, you will need to visit lostandfound.dol.gov and create an account. The setup requires your:
- Legal name
- Date of birth
- Social Security number
- A valid photo ID
Once your account is created, you will be able to search for old retirement accounts.
Why This Matters
Finding a forgotten 401(k) could have a significant impact on your financial plan.
Whether it is a small balance or a substantial account, every dollar saved for retirement plays a role in building financial security. In fact, we have helped clients and prospects uncover residual balances ranging from less than a dollar to several thousand dollars that they did not know they had.
Even if you have already consolidated past employer-provided retirement plan accounts and have been intentional about not leaving anything behind, it is still possible for a residual balance to remain. This can happen when dividends or interest post to an account after it has been rolled over or transferred.
For that reason, it is worth checking periodically to make sure nothing is left behind. Even better, once located, these accounts can often be consolidated into your current retirement strategy, making it easier to track, manage, and invest your savings with intention.
How We Can Help
While you will need to create your own account to access the database, we can guide you through the process and help you decide what to do next if an old account turns up. For example, we can walk through questions such as:
- Should you roll the account into your current 401(k) or IRA?
- Is it better to leave the account where it is?
- How does consolidating assets help simplify your financial life?
You do not have to figure this out alone. We can help you evaluate your options in the context of your overall plan.
A Great Reason to Reconnect
This tool also provides a timely opportunity to check in with us. Even if you are confident you have kept track of every account, a quick search might be worthwhile. And if you have children, friends, or colleagues who have changed jobs a few times, they may benefit too.
Here are a few easy ways to think about it:
- “If you have ever changed jobs, you may have a retirement account left behind. Let’s see if there is money waiting for you.”
- “Checking for forgotten retirement accounts only takes a few minutes and could uncover thousands of dollars you did not know you had.”
Next Step
Take a few minutes to explore the Retirement Savings Lost and Found Database. Then, let’s talk about what you find. Together, we can make sure every piece of your retirement savings is working for you. It is a simple step that could uncover meaningful results for your financial future.
Source: Yahoo! Finance