Search For Unclaimed Retirement Benefits
When all else fails, search for yourself in the National Registry of Unclaimed Retirement Benefits. Not all employers participate in this service, but many do because it provides benefits that help them meet their legal requirements. It’s a free service, and it only requires your Social Security number.
Improve Your Investment Knowledge
Improving your retirement investing knowledge is always a great choice. We have some amazing resources here to get started, including our free Investing 101 course.
If you’re looking for a little more info, here are a few good books to get you started:
How To Check Your 401 Account
07.21.2019
No matter how much your investments are on auto-pilot, it is always beneficial to check your 401 account once or twice a year online. In your online account you can check your 401 balance, how your investments are performing, yearly rate of return and more. With this information, decide if any changes need to be made such as contribution amounts and investment choices. Summertime is the perfect time to check your 401 and see how youre doing against your retirement and 401 contribution goals.
If youre still new to retirement savings, check out John Olivers segment on retirement savings. He does the best job at making 401 plans entertaining.
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Why Are 401k Fees So Hard To Find
Simply put, 401K administrators make it hard to find fees. And before you think Im picking on 401Ks, it applies to Roth IRA and Traditional IRA fees as well. When you first go searching for your 401K plan fees, it can be pretty frustrating. Its not like your 401K administrator or employer sends you a bill at the end of the year that says heres how much you owe us for managing your retirement. Wouldnt it be nice if they treated us this way? But they dont. My opinion is that this setup is a result of the transition from employer-controlled pension funds to employee-directed 401K plans.
Back when there were no 401K plans, there were pension funds. Employers controlled everything with regard to your retirement assets. When the 401K was created, investment companies stepped up to fill the gap as administrators. They, along with the company, set the rules about how to report information to you. Unfortunately, this meant making expenses an afterthought in their communications with employees. And as long as they werent asking, the employers and administrators werent talking about the expenses.
Why Your 401 Matters
Your 401 matters just like any other investment account. If it is littered with funds that have high fees, itll eat into your long term returns and negatively impact your financial goals.
On top of that, for most people, a 401 makes up the majority of their retirement savings. One of the worst things that can happen is for you to wake up 40 years from now and realize that youre not prepared for retirement.
So why do most of us set up our 401 the first day of work and never look at it again?
I dont know.
But I think its about time we all take a quick peek under the hood and make sure everything is working as it should. So without further ado, let me introduce Blooom a financial services company that can help you better prepare for your financial future.
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Still A Great Choice If You Really Want To Spend No Time On Your Future
Despite those trade-offs and limitations, if what matters most to you is minimizing your need to think about your retirement while still saving for it, target date funds make a great choice. After all, they offer an opportunity for more growth when you’re early in your career and more stability when your career winds down, all without you having to make any moves on your own.
When paired with a contribution strategy that increases over time — such as auto-escalating contributions based on a percentage of your salary — they provide the core of a solid overall plan. Just recognize that in your quest for simplicity, you’re trading away opportunities for faster growth and a more personally tailored plan.
If those trade-offs are worth it to you for being able to build a retirement account balance without having to put much thought behind it after you set things up, then put that plan in place. It is certainly a better strategy than not saving anything at all for your retirement, and it can help you build a decent net worth over time.
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The Cons Of The Free Analysis
No Free Ongoing Management: Blooom gives you recommendations for free, but it stops there. If you want them to implement the recommendations for you then you have to pay their management fee .
Lack of Details: There is a tradeoff for every investing company between overwhelming investors with questions and information, and keeping things simple. Blooom leans on the side of keeping things simple. Which makes things easy, but also provides room for error in their analysis, so be sure to take that into account hwen reviewing your results.
Think About The Long Term
Remember that the economy tends to be cyclical, although its not a cycle that can easily be predicted.
Even so, short-term dips in your investments can be survived, when you look at the long-term.
So dont panic and try to sell out if you see something going down. Rather, ride it out and wait for better financial times.
Your investment will most likely grow again, giving you the money you need for retirement.
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What Is A 401
A 401 is an employer-sponsored retirement plan enabling workers to save money in a tax-deferred way. Often employers will match contributions up to a percentage of salary. Its just like any other retirement plan in the sense that youre trying to save money and reduce taxes as you do it. Like an IRA, you will pay taxes once you start taking withdrawals in retirement.
If you opted for it when you were hired, every paycheck a percentage of your salary is taken out and put into a 401 retirement account. Your employer may add some more money, maybe even the same amount, on top of that. That money is usually invested, and has been accumulating. How much is in there?
There are different types of 401s. A Roth 401 operates much in the same fashion as a Roth IRA. While still employer-sponsored, it uses after-tax income to fund itself, so you pay the taxes now, and not later in retirement. While one can deliberate the merits of which to use, the general consensus is that a Roth format is useful if one believes they will be in an higher tax bracket later in life when withdrawing from their retirement accounts.
Conversely, a traditional 401 advocate might argue that the ability to put more money into an account in the beginning and through time, allows the saver to make the most of compound interest.
Read more about how a 401 works in this article from TheStreet.
What If Your Employer Goes Out Of Business
Under federal law, your employer must keep your 401 funds separate from their business assets.
This means that even if your employer abruptly shuts their doors overnight, your money is protected. It cannot be used to pay off your companys loans, cover employee payroll, or for any other purpose.
If your company shut down abruptly, it is possible that a portion of money will be at risk. If your money has been withheld, but has not yet been sent to the 401 plan to be invested, the company could in theory, access those funds.
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Determine If Your 401 Account Was Rolled Over To A Default Ira Or Missing Participant Ira
One possibility is your employer rolled the funds over into a Default IRA.
If your employer tried to contact you for instructions as to what to do with your account balance, and you fail to respond, you may be deemed a non-responsive participant.
If they are unable to locate you altogether, you may be deemed a Missing Participant.
In either scenario, if the plan is being terminated, your employer may have put the funds in a Missing Participant Auto Rollover IRA.
This is an IRA account set up on your behalf to preserve your retirement assets until they are claimed by you or your beneficiaries under Department of Labor regulations.
To qualify for a Missing Participant or Default IRA, the account balance must be greater than $100 but less than $5,000 unless the funds are coming from a terminated plan, then the $5,000 ceiling is waived.
Finding a Missing Participant IRA
If your money has been transferred to a Missing Participant IRA, you should be able to find it by searching the FreeERISA website.
This search is slightly more time consuming than the national registry. Registration is required to search the database, which contains 2.6 million ERISA form 5500s, covering 1.3 million plans and 1 million plan sponsors.
If you know your money has been transferred to one of these default accounts, you should get it out into a standard IRA account.
Typically, these accounts must be interest-bearing, bear a reasonable rate of return, and be FDIC insured.
Here’s the bad part:
Do I Have A 401k I Don’t Know About
If you think that you may have enrolled in a 401K plan with a previous employer, but youre not quite sure, there are a few ways to find out if you did.
The easiest way is to contact the HR department of your former employer and ask them whether you ever contributed to a 401K while in their employment. Youll need to give them your personal details along with the dates that you worked for them, so keep this information to hand.
If your old employer has since gone bust or you cant remember which companies youve worked for in the past, check the National Registry of Unclaimed Retirement Benefits website. Youll be able to see whether youve been listed on their database by your old employer as someone with unclaimed retirement plan funds.
If you havent been listed on the National Registry of Unclaimed Retirement Benefits database, there are a couple more options to explore. Visit NAUPA or missingmoney.comwhere you can search by state based on where youve lived or worked to find out whether any unclaimed assets belong to you.
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How To Protect Your 401 From A Stock Market Crash
Stock market crashes are impossible to predict. However, you can protect your 401 from losing money if the market does crash.
Making sure you have enough money for retirement is the primary goal of contributing to a 401. Your 401 will inevitably go through a series of ebbs and flows throughout your working years. Some years youâll see tremendous growth, others you may even lose money. However, as you near retirement, youâll want to protect your 401 from down years, even a stock market crash.
To protect your 401 from stock market crash, invest more in bond, which has a lower rate of return but also much lower risk. To gain as much value as you can, investments heavier in stocks give you the best chance of multiplying your money. However, with stocks comes increased risk. Shifting the percentage of your investments to a more bond-heavy allocation can help shield you if the stock market crashes as you get closer to retirement.
Capturing as much of the good times as possible while avoiding significant losses isnât an exact science there are strategies to help shift the odds in your favor. Letâs take a look at the basics of investing your 401, so you can protect your retirement nest egg.
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Investment Choice And Fee Transparency
With our open architecture platform, you can choose from thousands of investment options with no proprietary requirements. Fee transparency means you know exactly what youre paying for, and our return of mutual fund revenue share policy gives revenue share payments from mutual funds back to participants.
Pooled Employer Plan: The 401 Plan Designed For Small To Medium
The Paychex Pooled Employer Plan makes it easier for businesses of any size to offer one of the most popular retirement plans for employees. While you reap the benefits of offering a retirement plan, we oversee plan set-up, implementation, monitoring, enrollment, and other duties. Learn why a PEP could be a retirement game-changer for your business.
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Contribute The Max For The Match
If your company is matching your contributions up to a certain point, contribute as much as you can until they stop matching the funds. Regardless of the quality of your 401 investment options, your company is giving you free money to participate in the program. Never say no to free money.
Once you reach the maximum contribution for the match, you might consider contributing to an IRA to diversify your savings and have more investment choices. Just don’t miss out on the match.
What Is Unclaimed Money
Unclaimed money is money that oftentimes has simply been forgotten about, in one way or another, and tends to wind up being held at a state agency until it is rightfully claimed. Accounts may be considered unclaimed or abandoned in as short as a year called the dormancy period if theyve been unused or the institution has been unable to contact the account owner.
After the dormancy period and efforts to find the rightful owner have been made, the institution can declare it unclaimed and send the money to state agencies in charge of unclaimed money. As part of this process, the institution has to include any identifying information it has.
Financial accounts can often be forgotten about, especially during the inheritance process. If all a decedents accounts are not listed during the process of estate planning, it can be very easy for an heir to overlook an account. The account may then sit dormant for years, if not decades, accumulating interest, dividends or capital gains.
Many types of unclaimed accounts exist, including:
- Retirement accounts, such as 401, 403 and IRAs.
- Insurance accounts or annuities.
- Forgotten savings bonds.
- Accounts from bank or credit union failures.
Unclaimed money can also take other forms, so if you know theres money out there with your name on it , youll need to contact the right agency.
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How To Find An Old 401 And What To Do With It
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The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.
There are billions of dollars sitting unclaimed in ghosted workplace retirement plans. And some of it might be yours if youve ever left a job and forgotten to take your vested retirement savings with you.
But no matter how long the cobwebs have been forming on your old 401, that money is still yours. All you have to do is find it.
