Broker Check

Where is My Old 401(k)?

March 15, 2018

Almost 12.5 million Americans change jobs every year, according to Retirement Clearinghouse via Forbes, and have to figure out what to do with a company-sponsored retirement account. If you are like a lot of people, most of your job changes have come at a hectic time. Either you left on your own because of a life change, or you were let go, which is usually a surprise and creates urgency in finding the next thing. If either of these is true for you, it’s easy to see how you left your retirement fund behind.
This is a big enough deal that on March 1, Sens. Elizabeth Warren, D-Mass., and Steve Daines, R-Mont., introduced the Retirement Savings Lost and Found Act, which would establish a national database of orphaned retirement accounts.

Why would people leave their 401(k) with an old employer?

As I often tell clients, “If that former employer is too stupid to value you as an employee, why would you let them watch your retirement money?”
People have several reasons for leaving their money behind when they change jobs, according to a 2015 survey done by TIAA:

  • 30 percent of respondents said they left one or more 401(k) accounts at a past employer.
  • Of those, 30 percent said they did it because they were satisfied with the company plan.
  • 23 percent said they didn’t know they had the option to roll the funds over to a traditional IRA account.
  • 20 percent said they didn’t know what to do with their 401(k).
  • 15 percent said they didn’t have enough time to roll the 401(k) over.

Just a few thoughts about those reasons not to move the old account:

  • If you worked for a smaller company, and more than half of American do, the retirement plans often are not very cost effective. Small plans can be expensive to operate and those expenses often get pass along to account holders.
  • If your plan is at a 401(k) you will have a limited menu of investment choices. Sometimes that’s just fine. But if it’s not, you don’t have any options since the plan is controlled by your old employer.
  • If you die, your 401(k) beneficiary options are less flexible.
    • Self-direct IRA beneficiaries have lots of control. They have the option to keep the money invested and growing in a tax-protected environment until they reach retirement age.
    • With 401(k) accounts, the beneficiaries have limited options that are spelled out in the individual 401(k) plan document:
      • For a spouse, the can usually take the 401(k) as a rollover to a traditional IRA which gives them some good options.
      • For non-spouses, the most likely option is to have all the 401(k) distributed to them in the year of the death.
        • The money will come to them free of a 10 percent early withdrawal penalty.
        • The money will be taxed as income in the year it’s received.
      • Some non-spouses have the option to take the payouts over a series of years. This can reduce how much income tax they pay on the money.

How Do I Find My Old 401(k)?

It’s actually not that hard to track down an old retirement account. By law, the company administering your account must send out statement at least annually and usually quarterly. Watch your mail. And even if you have fallen off the 401(k) custodian’s mailing list, you should be able to get a statement pretty easily. Here are the steps to take:

  1. First, call your old employer’s human resource department. Tell them you are a separated employee and you would like information to contact the 401(k) custodian. They should give you a phone number.
  2. Call the 401(k) custodian and tell them you want a current statement. They will ask you to identify yourself, which should be quite easy. They will always mail a statement, but sometimes they will fax or e-mail if you prefer. Ask them to explain the procedure to do a rollover to a traditional IRA. There might be a specific form which they can send you and they might be able to do it over the phone.
  3. Once you locate the account and get a statement you can start the rollover process. You may already have a traditional IRA. If so, you can roll the money direct into that account. If you don’t have a traditional IRA, it’s easy to open one.
  4. Meet with a financial planner who is your advocate – a fiduciary advisor – and who only gets paid by you – a fee-only advisor. They will be able to open the account and help you do the paperwork. If you are comfortable online, Vanguard, Betterment, Personal Capital or Wealthfront all have quick and easy online portals that will get an account opened for you.

Help for retirement planning

In general, it’s important to remember that all of your retirement savings, whether from your current job or a job you left 10 years ago, make up your retirement plan. Today, American rely on their retirement savings to provide the comfort and grace we all hope for in our golden years. I suggest you take it seriously.
And yes, I suggest you talk with a financial planner who is your advocate – a fiduciary advisor – and who only gets paid by you – a fee-only advisor. They will be great help to be sure your retirement savings works hard for you. Yes, I am a fee-only, fiduciary advisor and yes I am accepting a few good clients this year.
If this article has you thinking about your old 401(k), contact my office at I am always happy to meet with people who are working on their retirement plans.
Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.