Nearly 30% Of 401(K) Plans Are Forgotten or Lost—Here's How to Get Yours Back

If you're among the many people who resigned at an all-time high during COVID-19, you could have forgotten about your 401(k) account along the way.

When you leave a job, you have the option of leaving your 401(k) with your previous employer, cashing it out, rolling it over into a personal retirement account (IRA), or merging it with your next employer's 401(k). Employees frequently desire to leave their previous employer's plan behind when they change jobs. They can, however, be forgotten or even lost with time.

According to Capitalize, there were almost 25 million abandoned 401(k) accounts totaling around 20% of all 401(k) investments in the United States as of the close of 2021.

Because these monies are usually kept invested, they can mount to a significant amount of money: According to Capitalize's data, the average lost 401(k) account amount is $55,400. Furthermore, you're probably paying needless administrative costs to keep those other 401(k) accounts active, which is why combining 401(k) plans might be a good idea.

Double-check that you've documented all of your accounts to prevent losing those cash.

How to Locate Unclaimed 401(k) Benefits

The simplest approach to locate a misplaced 401(k) fund is to call your old employer's HR department and inquire whether you still own a 401(k) plan. If you still have previous statements, they should contain your plan's account number and contact information for the plan administrator.

In some situations, the amount of cash in your account may impact where the monies end up.

If the balance in your lost 401(k) fund is under $1,000, your former employer may cash it out. In such a situation, the corporation may have already sent you a check. They can roll your account into an IRA if the contributions are over $1,000 but under $5,000.

In any case, your former company should be willing to verify if they issued you the check or offer information on accessing the new IRA account.

However, companies may merge with other firms, or the company where you previously worked may no longer exist. This can make it more difficult to locate a stray 401(k) plan.

Luckily, searchable registries are available to help you locate previous 401(k) plans that you could have forgotten about.

You might begin by visiting the National Registry of Unclaimed Retirement Benefits, a protected website where you can search for missing plans with your Social Security number. The National Association of Unclaimed Property Administrators also maintains a database where you may search for plans using your first and final name.

If you believe your employer transferred your 401(k) to an IRA, you could utilize FreeERISA to investigate. If you're still having trouble, the Department of Labor's lost plans database may have up-to-date details on benefits that have already or are going to be canceled.

Once you've found your plan, you can keep it or request a straight transfer to your new employer's plan from the plan's administrator. You may also cash it out, but you'll have to pay income taxes on the funds in addition to a 10% withdrawal penalty if you're under the age of 59½.

Reasons to Roll Over Your 401(k)

There are a number of situations where taking funds out of an existing 401(k) plan makes sense. One is that the plan administrator's costs are too high. Or maybe the fund's operating cost ratio is greater than you desire to pay.

Performance may also be a factor in money transfers. It's possible that your previous strategy just isn't producing the outcomes you were hoping for and that you have to achieve your financial objectives. You may also have seen alternative tax-advantaged schemes producing far better results.

How to Roll Over Your Old 401(k)

Here are the crucial steps you should take if you decide to roll over an outdated 401(k) plan:
1. Check your account balance
2. Decide if you want to stick to the 401(k) limits
3. Evaluate the quality of the 401(k) alternatives
4. Locate the best IRA provider
5. Determine if you want to convert your standard 401(k) funds to Roth assets
6. Beware unnecessary taxes
7. Decide what to invest in

If you have money in a few old 401(k)s, they could want your attention. You can maximize returns and revise your asset allocation by doing the above actions.
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