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Do You Know Where Your Retirement Money Is?

Do You Know Where Your Retirement Money Is?

October 09, 2023

Have you changed jobs many times during your career? If so, have you always remembered to either move money from a former employer’s retirement plan into a new plan or roll it over into an IRA?

Or are you one of the estimated one in five Americans who have left over $1.35 trillion in "forgotten" assets behind in one or more former employers’ retirement plans?

In some cases, moving these assets may seem more trouble than it’s worth, especially if some account balances are less than the cost of a night on the town.

But the point is, it’s your money, and it’s meant to be invested for your retirement. Consolidating these balances into a single account not only will give you a comprehensive view of your retirement nest egg, but you may also benefit from a better variety and quality of investment options and lower fees.

The risks of staying put

Once you’re no longer an active participant, ex-employers don’t necessarily have to keep sending you plan-related communications or quarterly statements. So, the only way you may be able to find out where your account stands is by logging onto the plan’s self-service web portal—if you can remember your credentials.

This can be pretty inconvenient, especially if you’ve left assets behind in several different plans.

Generally, employers can’t kick you out of their plan if you have account balances of $5,000 or more. But what if they switch plan providers or completely change their fund lineups? Money you originally invested in a mix of funds may be mapped to the closest equivalent choices in the new plan. But what if these replacement funds have inferior performance or higher expenses? Do you really want this money to be invested in a way that doesn’t meet your standards?

Smaller-account evictions

If any of your account balances with former employers are less than $5,000, they can kick you out of their plans without your consent.

If the balance is between $1,000 to $5,000, they can roll the money over into an IRA under your name. The choice of IRA custodian is theirs, not yours, and it might not be one you would have chosen on your own.

If your account is worth less than $1,000 your ex-employer can simply close your account and mail you a check for the balance in cash. Taxes may be withheld on that withdrawal. If they’re not, you may end having to pay taxes anyway because this cash-out is treated as a retirement distribution.

To avoid or recoup taxes, you’ll need to transfer that amount to your new employer’s retirement plan or into a Traditional IRA, generally within 60 days of receiving the payout. If taxes were withheld on the initial distribution, you may be able to request a tax credit for this amount when you file your tax return.

Taking the initiative

In most cases, you can initiate rollovers or transfers of assets from dormant retirement accounts simply by contacting the benefits department of your former employers.

But there may be situations where your old company went out of business or was acquired by another company and their updated contact information can’t be found.

If you have old statements from these plans, you may be able to get this information by contacting the plan’s former administrator or recordkeeper. But if you don’t have this paperwork, or you’re not sure whether you still have retirement accounts with former employers, there are a few resources you can use to find these "lost" accounts:

These dormant account “treasure hunts” can be time-consuming and may require you to jump through many administrative hoops. That’s why, if you’ve left a long trail of retirement accounts in your career wake, it’s always better to start consolidating when your memories of where these assets are located are still fresh.




This article was co-authored by Dan Flanagan and Jeffrey Briskin. Dan is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 508.598.1082 or  Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.


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