You Found Your 401 Plan Now What
If find your lost 401, congratulations! However, its not time to celebrate by blowing it all on a fancy vacation or a shopping spree. You invested that money with the purpose of building a retirement nest egg and thats exactly where those funds should stay.
To invest your old 401, you can do whats known as a rollover to avoid early withdrawal penalties. You can roll over the funds into an individual retirement account or into another retirement plan, such as your current employers 401.
Rolling over your 401 into an IRA is a relatively simple process. First, you need to open an IRA, which you can do though most banks, brokerage firms and robo-advisors. The funds from your old 401 then can be sent directly to your new IRA. If you prefer to keep all your investments in one place and your current employer offers a decent 401, then you may want to consider rolling over the funds into that account .
In both cases, you can avoid withholding taxes if you roll over the funds directly via the plan administrator. If a distribution is made directly to you, you have 60 days to deposit it into your new retirement account in order to avoid taxes and penalties.
Contact Your Previous Employer For Information About Your Old 401
Permitting that your previous employer is still in operation, you can reach out to them directly. Typically, the human resources department will have information on your account or point you in the right direction.
Most companies try to reach out by sending mail regarding your account when you leave the company. If you moved when you changed jobs, you might have missed those notifications. If the company did not hear from you for an extended period, it might have transferred your funds to a separate, unmanaged account.
Making The Most Of Your 401
If youâve started putting money into your 401, congratulations! You already made it past the hardest part, which is getting started. But donât just set it and forget it. Youâve also got to keep your money growing. These tips can help.
Commit to raising your contribution periodically. Even just raising your contribution by 1 percent every six months or year can help, and itâs unlikely youâll miss that amount from your paycheck, especially if you up your contribution whenever you get a raise. Some 401 plans even let you schedule an increase automatically.
Earmark portions of your raise or bonuses for retirement. If you receive a promotion that bumps your pay by, say, 5 percent, consider raising your contribution amount by the same percentage. Or if youâre expecting a big year-end bonus, consider sending some of that to your 401 for a one-time boost. Your future self will thank you.
No investment strategy can guarantee a profit or protect against loss. All investing carries some risk, including loss of principal invested.
This article is not intended as legal or tax advice. Northwestern Mutual and its financial representatives do not give legal or tax advice. Taxpayers should seek advice regarding their particular circumstances from an independent legal, accounting or tax adviser.
This article was updated May 7, 2019.
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Track Down Previous Employer Via The Department Of Labor
If you cant find an old statement, you may still be able to track down contact information for the plan administrator via the plans tax return. Many plans are required to file an annual tax return, Form 5500, with the Internal Revenue Service and the Department of Labor . You can search for these 5500s by the name of your former employer at www.efast.dol.gov. If you can find a Form 5500 for an old plan, it should have contact information on it.
Once you locate contact information for the plan administrator, call them to check on your account. Again, youll need to have your personal information available.
Retirement Funds Are Different
They are not turned over to the state, which means, its possible that nothing will happen to your money until something happens with your company ).
A common scenario is when you leave a company and move, perhaps you even change your email address.
Perhaps months or even years have gone by, or youve moved to the other side of the country. Then something happens with your employer and they need to contact you for instructions of what to do with your account.
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If You Can’t Find Your Old Employer
Sometimes, your former employer may no longer exist because it was acquired by another company. In such cases, your old 401 may have been merged into the acquiring company’s plan. Try contacting the acquiring company’s HR department to see if they can assist you.
You can go to theUnited States Department of Labor website to search for abandoned plans or plans that are in the process of being, or have been, terminated. If you cannot locate your employer or find your plan in the database, you can contact an EBSA’s Benefits Advisor to assist you by calling 1-866-444-EBSA .
Finding Old Retirement Accounts
You may want to start by contacting your former employers and the plan administrators, the companies that ran the retirement plan. Sometimes, youll find that your retirement account is still there and chugging along as is, hopefully growing in value over time. If you want, you may be able to leave it there, although update the company with your current contact information so it can let you know about any important changes.
However, its not always that easy. If your account had less than $5,000 in it when you left, the plan administrator can transfer the funds to an individual retirement account that was set up in your name. If it had less than $1,000, the company may have tried to send you a check for the amount to the address it had on file. You may also have trouble tracking down the account if the company went bankrupt or switched plan administrators, leaving it up to you to figure out who is holding onto the money now.
One thing is certainother companies dont get to keep your money. If a company cant figure out how to contact you, it has to turn unclaimed funds over to state agencies. You can start searching for your unclaimed funds in these databases:
Once you find your account or money, youll still need to decide what to do with it.
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Too Complicated Get Some Help
If this process seems like a lot of work, youâre not alone. Locating your old 401 accounts and finding the proper place to transfer them to can get confusing.
The Takeaway On Finding Lost 401 Money
If you suspect that you’ve left a 401 behind somewhere and don’t attempt to locate it, you’re risking losing the plan — and the money — for good.
But if you don’t respond, a company holding an old 401 account has no obligation to pursue the issue further, and eventually will relinquish your old account to the state, and all of the funds held, as well.
Don’t let that happen to you. Use the tips listed above to make every effort to find your lost 401 account and get the money back for yourself, and don’t let “free” retirement slip out of your control.
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What You Can Do Next
To keep track of your retirement accounts, you first must know where they all are. Once you gather all your old accounts in one place and make sure they are properly balanced, its about sticking to the same investment principlesensuring your money is in diversified, low-cost fundsthat you would follow for your current company retirement plan.
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Find Your 401s With Your Social Security Number
If you don’t have any of the information mentioned above, you’re not out of luck just yet. You can use your social security number to search for and find old 401s.
When you join a 401 at work, you’ll provide your social security number. This ties your 401 to any tax responsibilities you may have but also permanently stamps your 401 to your identity.
There are a couple of places to search for your old 401s using your social security number.
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Search Unclaimed Assets Databases
If your search is still coming up empty, your former employer has folded or was bought by another company, youâre not out of luck yet.
It may take a little more effort and research but there are many national databases that can help you track down your old 401 accounts:
- The Department of Laborâs Abandoned Plan database can help you identify what happened to your old plan and the contact information of the current administrator
- The National Registry of Unclaimed Retirement Benefits allows you to do a free search for any unclaimed retirement money using just your Social Security number
- FreeERISA is another free resource to search for any old account information that has been filed with the federal government
- The Securities and Exchange Commissionâs website or your stateâs Secretary of State can provide more information on your previous employer
How Does Money Get Left Behind
Very few people stay at one employer the entire length of their career.
But unlike your bank account which you may have from job to job, a 401 account is linked to your employer. It is up to you to do something about it.
When you leave your employer, the money may stay in the account for an indefinite amount of time.
However, if the company closes the 401 plan, files for bankruptcy, goes out of business or is acquired by another company, you may be forced to decide, within a short period of time.
Its possible that years will go by after you parted ways with your old job, and then youll get a letter notifying you that you need to move your 401 account, or take a distribution.
If this happens, youre much better off rolling the money into an IRA account, or transferring the money into your current companys 401 plan.
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Use An Outside Company Like Beagle
If your search in the above databases doesnât provide any results, utilizing an outside company to find your old 401s and do the difficult work of consolidating them is a great option.
Beagle is the first company of its kind that will do the difficult work for you. We will track down your old 401s and find any hidden fees in your current 401 plan.
Then, they will provide you with options on how best to rollover your 401s into one convenient, low-cost investment option.
This is a great option for anyone who is not sure where to start or even where to begin looking.
A Special Note For Pennsylvania Residents
If you live in Pennsylvania, you should start your search sooner rather than later.
In most states, lost or abandoned money, including checking and savings accounts, must be turned over to the states unclaimed property fund. Every state has unclaimed property programs that are meant to protect consumers by ensuring that money owed to them is returned to the consumer rather than remaining with financial institutions and other companies. Typically, retirement accounts have been excluded from unclaimed property laws.
However, Pennsylvania recently changed their laws to require that unclaimed IRAs and Roth IRAs be handed over to the states fund if the account has been dormant for three years or more.
If your account is liquidated and turned over to the state before the age of 59.5, you could only learn about the account when you receive a notice from the IRS saying you owe tax on a distribution!
Company 401k plans are excluded from the law unless theyve been converted to an IRA. If you know you have an account in Pennsylvania, be sure to log onto your account online periodically. You can also check the states website at patreasury.gov to see if you have any unclaimed property.
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How Many Lost 401ks And Other Retirement Accounts Are Forgotten
Think lost and forgotten retirement accounts amount to chump change? Although no one keeps data on how much retirement money gets lost or forgotten, in an interview with Bloomberg, Terry Dunne of Millennium Trust Co., made an educated guess based on government and industry data that more than 900,000 workers lose track of 401k-style, defined-contribution plans each year.
That figure doesnt include pensions. According to the Pension Benefit Guaranty Corporation, an independent agency of the U.S. government tasked with protecting pension benefits in private-sector defined benefit plans, there are more than 38,000 people in the U.S. who havent claimed pension benefits they are owed. Those unclaimed pensions total over $300 million dollars, with one individual being owed almost $1 million dollars!
Could that money belong to you?
Look For Contact Information
If you don’t know how to contact your former employer perhaps the company no longer exists or it was acquired or merged with another company see if you have any old 401 statements. These should have contact information to help put you in touch with the plan administrator.
If you don’t have an old 401 statement handy or yours doesn’t tell you what you need to know, visit the U.S. Department of Labor website and look up your employer. There you should find your old retirement account’s tax return, known as Form 5500. That will most likely have contact information for your 401’s plan administrator.
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Your best bet is to visit FreeERISA.com, which can help you track down your old 401 using the following website tools:
- Code search: Find employee benefit and retirement plan filings by location.
- Dynamic name search: Find 5500s even if the plan sponsor’s name changed.
- Instant View: See benefit filings right in your browser instantly.
Leverage The National Registry
The National Registry, run by Pen Check, a retirement plan distribution firm, is a nationwide, secure database listing of retirement plan account balances that have been left unclaimed by former participants of retirement plans.
The site offers an easy, free-of-charge way to locate lost or forgotten employee retirement accounts. You can conduct as many searches as you want, using just your Social Security number. The site is safe, encrypting any information you input on a secure server.
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Tracking Down A Lost 401
Its easy to understand why some workers might lose track of an old 401: Those born between 1957 and 1964 held an average of 12.4 jobs before the age of 54, according to the Bureau of Labor Statistics. The more accounts you acquire, the more challenging it is to keep track of them all.
Perhaps this is why there are some 24 million forgotten 401s holding assets in excess of $1.3 trillion.1 Left unattended too long, old accounts can be converted to cashand even transferred to the state as unclaimed propertyforgoing their future growth potential.
If youre among those with misplaced savings, heres how to locate and retrieve them:
Search Form 5500 Directory
All employers that provide 401 plans to their employees are required to fill out a 5500 form every year with the DOL. Websites like FreeERISA* allow users to search by company name to locate the correct Form 5500. Another option is to search the DOLs 5500 database. Both simple searches will provide you with additional contact information.
For further assistance in finding lost 401 plans, the U.S. Department of Labor has an Abandoned Plan Search, which helps participants and others find out whether a particular plan is in the process of beingor already has beenterminated. The name of the Qualified Termination Administrator responsible for the termination will be listed as well, giving you a good idea of who to contact .
But beware: some companies, even legitimate ones, can acquire your information about unclaimed retirement accounts and offer to assist you with your search, often with a percentage fee for their services.
When it comes to planning and saving for retirement, its vital to have all your assets accounted for. Locating an old 401 plan is like finding cash in the pocket of an old pair of jeans. Its money you forgot you had but are happy you found. So if you know youve contributed funds to a 401 account but cant figure out where those funds are, the resources listed above may help you find past retirement accounts that may have been lost along your employment journey.
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Option : Roll Over Your Old 401 Into An Individual Retirement Account
Still another option is to roll over your old 401 into an IRA. The primary benefit of an IRA rollover is having access to a wider range of investment options, since youll be in control of your retirement savings rather than a participant in an employers plan. Depending on what you invest in, a rollover can also save you money from management and administrative fees, costs that can eat into investment returns over time. If you decide to roll over an old 401 into an IRA, you will have several options, each of which has different tax implications.