Lost Track Of Your Old 401(k) Accounts? A New Service Could Help Recover The Money | Global News Avenue

The Department of Labor (DOL) is developing a Retirement Savings Lost and Found database to help workers find lost workplace retirement plans, such as 401(k)s.

The purpose of the database is to help workers find lost retirement accounts in situations such as changing jobs or an employer going bankrupt. The database has not been launched yet, but is expected to be online on December 29th. Currently, the DOL is collecting data and information from retirement plan administrators and recordkeepers to provide this database.

“Our goal is to ensure that workers and their beneficiaries receive all the retirement benefits they deserve and were promised, and we trust plan sponsors and administrators and their All service providers have this goal.”

Capitalize, a fintech company that assists with rollovers, estimates that in May 2023, there were more than 29 million forgotten 401(k) accounts worth more than $1.6 trillion.

this may be why Security 2.0Federal retirement law directed the Department of Labor’s Employee Benefits Security Administration (EBSA) to establish the database.

What happens when people forget about their 401(k) plans?

Whenever a worker leaves or changes jobs, their retirement savings may be automatically withdrawn (if the balance is less than $1,000), remain in the plan, or rolled into another retirement account (automatic or voluntary), which can confusing and time consuming.

It’s not just the old 401(k) plans that investors are forgetting. Once the money is transferred to an IRA, sometimes investors make mistakes like this: Investments held in cash equivalents Such as money market funds, rather than actively investing and losing out on huge potential gains that compound over the years.

David John, senior strategic policy adviser at AARP, noted that some retirement recordkeepers, such as Vanguard and Fidelity, have instituted a program to help employees roll over their old 401(k)s into their new employer’s retirement plan. However, he said the government’s program may be more accessible.

“We still need a simpler system that allows people to move money from employer to employer,” he said.