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When you leave a job, you might forget to move your retirement plan. If you’ve had multiple jobs throughout your career, there’s a chance you have one or more 401(k)s or other retirement plans that you don’t know about. A new federal initiative could help you locate forgotten retirement money.
Passed in December 2019, the SECURE 2.0 Act contains a list of provisions to help more people save for retirement. One part of this legislation directed the Employee Benefits Security Administration, a part of the Department of Labor, to build a database so we can search for lost retirement accounts. Congress gave the department a deadline of Dec. 24, 2024, to establish this database.
The EBSA began reaching out to retirement plan administrations in November with a notice to collect information to help fill out this database.
“Our goal, which we believe plan sponsors and administrators and their service providers share, is to make sure that workers and their beneficiaries receive all the retirement benefits they earned,” Lisa M. Gomez, assistant secretary for EBSA, said in a Nov. 18 statement.
This database isn’t live yet, and experts aren’t sure if it will be up and running before the end of the year.
“I would guess that the deadline won’t be met,” said Chad Gammon, CFP and owner of Custom Fit Financial. “The amount of data to go through would be quite a bit for it to be completed on time.”
We’ll keep you updated with next steps once the database does launch. For now, here’s everything you need to know about the benefits of this database, how to find an old 401(k) now and tips to help you decide what to do with an old retirement account.
How will this database help?
It can be frustrating to try to track down old retirement accounts, particularly from companies that no longer exist, were sold or don’t have much of an online footprint. The federal retirement account database plans to make it easier to find any old accounts that belong to you so you don’t miss out on this money.
“It is fairly common for people to forget about retirement accounts that they opened in their 20s and then remember about them 40 to 50 years later,” Gammon said. “By providing an easy way to check, it would help find a lot of abandoned accounts.”
Read more: I Can Retire Early After Paying Off $300,000 in Debt. Here’s How I Did It
How can you find an old 401(k) account now?
Once live, this database should make it easier to track down old retirement accounts, but you have other options if you’re trying to locate a plan now.
If you think you’re missing a retirement plan, you can start by calling the human resources department of your former company or the new company (if your company was bought out). Ask for the contact information — name, phone number and email address — of the 401(k) plan administrator and then reach out to the administrator to ask about your old account. You may have to be patient and persistent.
If your former company no longer exists, this process is a bit trickier. Start by searching your records for old 401(k) statements. If you’re living at the same address, you may still be receiving statements for active accounts — also check your email if you receive statements electronically.
If you don’t live at the same address and can’t find any old statements, it gets even harder, but don’t give up. There are a few ways to search for abandoned 401(k) accounts online.
Gammon recommends starting with the National Registry of Unclaimed Retirement Benefits, a free, nationwide database maintained by Penchecks Trust. All you need to provide is your Social Security number.
If that doesn’t work, try FreeERISA, a database of Employee Retirement Income Security Act form 5500s, which are annual benefit reports that companies must file every year. You have to register to use the site, but it’s free. FreeERISA might also be able to help you find a 401(k) that’s been rolled over into an IRA. The Department of Labor also has a few search tools that can help, including its own Form 5500 search and an abandoned plan database, which contains information about 401(k) plans that have been terminated.
These two databases aren’t the most extensive, and they’re not always user-friendly, Gammon said.
There are also paid services that can help with this task, such as MeetBeagle and Capitalize. Just watch out for sneaky fees.
What should you do with the money in an old 401(k)?
If you find a 401(k) you forgot about, you have a few options to consider:
Leave the money in your old account
If you don’t make plans for your retirement money, it will likely remain in your existing account. It will still accrue interest and continue to grow, but since you won’t be able to contribute to it, you’ll miss out on earning even more in compounding interest. You also may be charged monthly or annual maintenance fees to maintain your account.
This might still be a good option if you’re in between jobs or not yet eligible for benefits at your new workplace. But be sure to keep track of important account information, including the plan provider, its contact information and your account number. Check statements regularly for any updates to the plan.
Roll it into a new retirement account
In most cases, it will make sense to roll your 401(k) or IRA into your new employer’s workplace retirement plan. As long as you roll it into the same type of plan (pre-tax versus post-tax), there won’t be any tax penalties for doing this.
If your new employer doesn’t offer a 401(k) option or you’re between jobs, you can also move your 401(k) into a traditional individual retirement account (IRA). A traditional IRA has a lower contribution limit than a 401(k) — $7,000 for an IRA compared with $23,000 for a 401(k) in 2024 — but both reduce your taxable income.
You can roll over your old account online, over the phone or via live chat, depending on the plan provider. In some cases, you might receive a check from the old provider, which you’ll need to provide to your current retirement plan within 60 days to avoid tax penalties.
Think twice before rolling your 401(k) into a Roth IRA. 401(k)s and traditional IRAs let you contribute pre-tax dollars, while you contribute post-tax to a Roth IRA. If you roll your 401(k) into a Roth IRA, you’ll be on the hook for paying taxes on the amount you transfer come tax season.
Cash it out
You might decide to cash out your 401(k) when you leave a job, but experts urge against this. If you do that before you’re 59 and 1/2 years old, you could face a 10% tax penalty and will be required to pay income tax on the lump-sum amount. If you have less than $1,000 in your retirement account, it might automatically be cashed out. Plus, you’ll have less savings when you reach retirement age. If you have less than $1,000 in your retirement account, it might automatically be cashed out.
Still have questions? Talk to a financial adviser or accountant about your options and tax considerations before deciding what to do with your money.
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