Wouldn’t it be nice if just as you got to your retirement, someone handed you a pile of cash that you forgot you had? Many a hopeful retiree is surprised about ‘found’ retirement funds. Many are also optimistic after getting a little note from the Social Security Administration just to have their dreams quickly smashed.
Do you know where all your retirement savings are?
How Could Anyone Lose Track of Their Retirement Funds You Ask?
I know it sounds crazy. How could anyone ‘forget’ about a retirement plan? Man, it happens A LOT! I get sweet letters all the time from former employees trying to track down if they have any money left with the company. Some of them are hand-written (bless their little hearts) and sound so hopeful. You know they could really use the money and they can’t believe that they may have a surprise windfall coming to them.
What am I talking about, right? You know where every cent you ever earned was spent or saved, don’t you? Pretty unlikely. These days, people are more likely to change jobs every couple or few years. After a couple decades of changing jobs, maybe even towns or states, it’s easy to forget if you left behind some benefits over the years. Were you vested in that pension plan you vaguely recall from 1984? I don’t remember. Did I rollover that 401(k) to MegaCorp when I got that big job in California? Ugh. I don’t recall.
Please Take Care to Manage All Your Accounts When You Switch Jobs
We are certainly not advocating that you leave your money behind you unattended. There are times when leaving a 401(k) account with a former employer is a great idea (perhaps they have excellent funds and super-low investment fees) but for gods-sake, don’t abandon the funds! You should stay on top of all your accounts for a holistic view of your retirement savings. Even if you leave them with a former employer for sound reasons, you need to keep your contact information up-to-date with them and manage your investments.
These days, however, when so many administrators are pushing for electronic communications only – you may no longer be getting paper statements on your old accounts, right? Have you moved several times and lost a few files regarding your old benefits?
Maybe your former employer was sold or merged with another company? Or maybe they just changed their names and moved headquarters. Tracking down your old accounts can be difficult.
How the Social Security Administration Can Help (or just gets your hopes up for no reason)!
When you file for Social Security benefits (either as you near age 62 or due to an earlier disability) the Social Security Administration will mail you a nice letter including details on any retirement plan benefits that you MAY have been eligible for at one time from former employers. It’s called the Social Security Administration Potential Private Pension Benefit Information Notice.
The notice looks like this:
Nice huh? There are several problems with the notices, however.
First, they can include really out-dated information. Say you left a company in 1992 and at the time you had a 401(k) plan with a balance about $12,000. The notice you get from the SSA will show your old employer’s information, the formal plan name, a code about what kind of benefit you had at the time, the year ‘1993’ (the year after you terminated from that company) and the amount of $12,000 or if a monthly benefit, perhaps a smaller monthly amount that you MAY qualify for. This information is reported by your old company to the IRS who shares it with the SSA. Unfortunately, the SSA merely has information from 1993 but nothing is ever updated with them – ever!
The bottom of the notice includes a section that looks like this:
You may have taken that $12,000 401(k) balance, for example, and rolled it over to another 401(k). Your former employer is not required to report on activity since you left. So many, many times – you’ve already received all the benefits due to you and the letter is just swirling up false hope in your little retiree heart.
You may have already taken a fat lump sum and paid taxes on it. This is especially true in recent years as many employers are offering lump-sum buyouts of pension benefits to get the liabilities off their books.
Sadly, people have really poor memories. I’ve had retirees scream at me over the phone demanding benefits they already received. They simply forget that they already took the money out and it’s long gone.
Second, they include employer information that also may be out-dated. The company you worked for may no longer even exist. How the heck are you supposed to track them down to find out what happened to your money?
What Can You Do?
- If you can find your old employer (or the current version of your old employer), contact them by phone, email, or snail-mail to locate the HR/Benefits department to inquire.
- If you can’t find them on your own, the DOL can help you. Call 1-866-444-3272 or askebsa.dol.gov for assistance.
- Try the Pension Rights Center at pensionrights.org/find-help.
- If you think your retirement plan was a pension (or defined benefit plan) then the Pension Benefit Guaranty Corporation (PBGC) may be able to help you. Go to pbgc.gov or call 1-800-400-7242
- Dig into your own records to be sure that you did not already claim those benefits or roll them into another retirement plan.
- Network with your former colleagues. If they are near your age, they may have done similar research themselves and may be able to provide tips on how to locate the right people to inquire about your funds.
What If Your Company Went Out of Business
If your sleuthing uncovers that your former employer closed up shop and you are absolutely sure that you did not roll over the money into another plan or take a distribution, then your former employer may have sent your money to a company who specializes in orphaned retirement funds. Millennium Trust Co. is a popular company that deals with this. They set up IRAs for participants when the company can’t find you (this happens a lot) or your fail to roll over your funds when they are shutting the plan down.
You can call them at 1-800-258-7878. They even have online search tool for you to use:
Three other companies are Inspira, PenChecks Trust, and Retirement Clearinghouse, LLC. You can google these firms to find current contact information.
It’s Really a Big Problem
Fortunately, the plight of lost retirement funds is getting more attention. In 2018, the PBGC is slated to start accepting transferred funds from terminating 401(k) plans when employers can’t track down the participants. This may dampen the business for Millennium Trust and other companies who specialize in this.
There are also plans to create a universal registry system, but at first, participation by employers will be voluntary. Hopefully most employers will find value in participating.
Please, please, please don’t let this happen to you. Be diligent about keeping up on your accounts, even the small ones. Keep your mailing address and email address current with former employers. Consider consolidating your retirement funds if you think it’s too much of a hassle to keep track of so many accounts!
If you do get one of those SSA notices – do your best to follow up on the information to check it out. It could lead you to some benefits you forgot you had!
P.S.: The SSA also sends these notices when a spouse dies, so sometimes it’s a goose chase for money that your DH/DW may have earned.
Are you good about keeping track of all your old benefit plans?
What would happen if something happened to you tomorrow? Would your spouse or loved ones have the information they need to track down your old pension or 401(k) to see if benefits are payable to them?
What kind of filing system are you using to leave a paper trail?