If you’re one of the many workers who have quit their jobs in record numbers during the pandemic, you may have forgotten your 401(k) plan along the way.
When you quit a job, you can either keep your 401(k) plan with your old employer, cash it out, transfer it to an individual retirement account (IRA), or merge it with your new company’s 401(k) plan.
Employees often want to leave their old employer’s plan behind when they change jobs. However, over time, they can be forgotten or even lost.
According to estimates by Capitalize, a financial services company specializing in 401(k), there were nearly 25 million forgotten 401(k) accounts at the end of 2021, representing approximately 20% of all 401(k) assets in the US. s.
Because those funds tend to stay invested, they can add up to a lot of money: The average balance in a forgotten 401(k) account is $55,400, according to Capitalize analysis. Plus, you’re likely paying unnecessary administrative fees to keep those extra 401(k) accounts open, which is why consolidating 401(k) plans can be a smart move.
In order not to miss these funds, you should make sure that you have tracked down all your plans.
How to find a lost 401(k)
The easiest way to track down a stubborn 401(k) account is to contact your previous employer’s human resources department and ask if you have a 401(k) plan left. Or, if you have old bank statements, they should include your plan’s account number and contact information for the plan administrator.
In some cases, the amount of money in your account can affect where the funds end up.
If the balance in your lost 401(k) account is less than $1,000, your old employer may cash it out. If so, the company may have already mailed you a check. If the funds are between $1,000 and $5,000, they may convert your plan into an IRA on your behalf.
In any case, your old employer should be able to confirm whether they sent you a check or otherwise provide you with details of how to access your new IRA account.
However, sometimes employers merge with other companies or the company you used to work for no longer exists. This can make it difficult to track down a stray 401(k) plan.
Luckily, there are searchable databases you can use to find old 401(k) plans you may have forgotten.
You can get started with the National Registry of Unclaimed Retirement Benefits, a secure website where you can use your social security number to search for lost plans. The National Association of Unclaimed Property Administrators also maintains a database where you can search for plans by your first and last name.
If you think your employer has placed your 401(k) in an IRA, you can use FreeERISA to track it down. If you’re still having no luck, the Department of Labor’s Discontinued Plans Database may provide some updated information on plans that have been or are about to be discontinued.
Once you’ve found your plan, you can stick with what you have or ask the plan’s admin for a direct rollover to the plan of your new employer. You can also withdraw it, but you will have to pay income tax on these funds and a 10% withdrawal penalty if you are under the age of 59½.
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