SOME Americans could be sitting on thousands in cash and not even know it.
Trillions collectively rest unclaimed as part of accounts that are left idle to accrue money over time.
GettySome Americans could have thousands in online accounts (stock image)[/caption] GettyAt least $1.7 trillion remains unclaimed for many (stock image)[/caption]Those accounts would be for retirement, specifically a 401(k).
A report from financial services firm Capitalize found in a 2023 study that around $1.7 trillion is lost or unclaimed in forgotten 401(k)s.
The average balance is typically around $56,616 in more than 29 million accounts.
Given that Capitalize’s report is from two years ago, it’s likely even higher now than before.
“That’s a heck of a lot of money,” James Royal, an investing analyst at Bankrate, told USA Today recently.
“You could really have tens of thousands of dollars out there.”
But, how could someone possibly forget about over $50,000?
TASK OVERLOAD
Most often, it’s because of how 401(k)s are transferred or “rolled over” when a worker switches jobs.
There are several steps that need to be taken to ensure that the money is re-distributed to another 401(k) plan and continues accruing cash through the new employer.
With all of the measures that are required to take on a different position, David John, a senior strategic policy advisor at the AARP Public Policy Institute, says that the 401(k) details may easily be lost track of.
“People who are leaving a job, and especially if they’re moving to another one, usually have a bunch of things going on,” John emphasized.
Even the eldest in the American workforce today, those born between about 1957 to 1964, have changed jobs around 12 times on average, per AARP data.
In 2021 alone, about 47 million Americans also quit their jobs, a record high.
The thing is, those workers who leave a job even only after a couple of years might have a few thousand dollars in their 401(k).
Where to save your retirement money
There are several different places where you can put the money you save for retirement. Each has different tax advantages, but not all of them are available to everyone.
401(k) – an employer-sponsored retirement account. Contributions are made pre-tax and many employers will match a certain percentage of your contributions. Taxes are paid when the funds are withdrawn in retirement.
Roth IRA – an individual retirement account. Contributions are made post-tax but withdrawals in retirement are not taxed.
TSP (thrift savings plan) – a retirement savings and investment plan for Federal employees and members of the uniformed services. They work similarly to 401(k)s but may have more limited investment options.
Pension – an employee benefit that commits the employer to make payments to the employee in retirement. Pensions are becoming increasingly rare.
While some may easily forget or think it’s not worth the effort to ensure it rolls over properly, the cash could increase drastically over the next 10 to 20 years.
“Even 10 or 15 years ago, if you put in $5, $6, $7,000, that could be worth three, four, or five times as much today,” Royal noted.
STEP BY STEP
Fortunately, there’s at least four easy steps consumers willing to take an hour out of their day can do to find what could be upwards of $56,616 or more, according to Bankrate.
First, it’s best to track down any possible statements from the old 401(k) plan.
They could’ve came through the mail or electronically via email.
The statements will typically have the employer’s details and the exact period when you were enrolled in the 401(k) plan, along with contact information for someone that can help you access the account.
Secondly, contacting your former employer or former co-workers could be a massive help, especially if old statements can’t be found.
The email for the Human Resources department is the best route, as they can connect you with someone who handles benefits and retirement accounts.
After delivering personal information like your name, Social Security Number (SSN), and other details, it should be easy to find.
DATABASES TO REMEMBER
Those who still can’t find it can check the Department of Labor’s (DOL) website as well.
A document called Form 5500 can be found for the company that you previously worked at.
Form 5500 is effectively an annual report regarding employee benefit plans, and there should be contact details for the plan administrator.
The DOL also has an abandoned plan database.
As a last resort, the publicly available databases for unclaimed assets like the National Registry of Unclaimed Retirement Benefits is the place to go.
All you’d need to do is enter your SSN and quickly see if there are unclaimed 401(k) funds.
It will either still be in the employer’s plan or rolled over into a special IRA account in your name.
Other sites like for the National Association of Unclaimed Property Administrators or missingmoney.com are also useful.
A warning was also recently issued regarding secret fees that could be draining 401(k) accounts rapidly.
At least $114,000 was also recently stolen from a New Yorker’s 401(k) due to an “outdated” method.
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