Do You Have Retirement Money to Claim? This New Database Could Help You Find Old 401(k)s
when you leave workyou may forget to adjust your retirement plan. If you’ve worked multiple jobs throughout your career, chances are you have one or more 401(k) plans or other retirement plans that you don’t know about. A new federal initiative could help you find your forgotten pension.
The SECURE 2.0 Act, passed in December 2019, contains a series of provisions to help More people are saving for retirement. Part of the legislation directs the Employee Benefit Security Administration, a division of the Department of Labor, to create a database so we can search for lost retirement accounts. Congress gave the department a deadline of December 24, 2024, to establish the database.
Ecologically or Biologically Significant Marine Areas (EBSA) began contacting retirement plan administrators in November and made the following recommendations: Notice of Collection of Information Help populate this database.
“Our goal is to ensure that workers and their beneficiaries receive all the retirement benefits they deserve, and we believe the plan Sponsors, administrators and their service providers share the same goals.” In a statement on November 18.
The database is not yet online, and experts are unsure whether it will be up and running before the end of the year.
“I guess there’s no way we can meet the deadline,” said Chad Gammon, CFP and owner. Customized finance. “The amount of data that needs to be processed to meet the deadline is quite large.”
Once the database is launched, we will keep you updated on next steps. For now, here’s what you need to know about the benefits of this database, how to find an old 401(k) right away, and tips to help you decide what to do with your old retirement accounts.
How can this database help?
Trying to track down old retirement accounts can be frustrating, especially ones that no longer exist, were sold, or don’t have much of an online footprint. The Federal Retirement Account Database program makes it easier to find any old accounts that belong to you so you don’t miss out on the money.
“It’s fairly common for people to forget about retirement accounts they opened in their 20s and then think about those accounts 40 to 50 years later,” Gammon said. “By providing an easy way to check, it will help Found a lot of abandoned accounts.”
Read more: I can retire early after paying off $300,000 in debt. I did this
How do I find my old 401(k) account now?
Once online, the database should make it easier to track old retirement accounts, but if you want to find a plan now, you have other options.
If you think you’re missing out on retirement planning, your first step is to call the human resources department at your former company or your new company (if your company was acquired). Ask for the 401(k) plan administrator’s contact information (name, phone number, and email address), then contact the administrator about your old account. You may have to be patient and persistent.
If your old company no longer exists, the process can be a little tricky. Start by searching your records for old 401(k) statements. If you live at the same address, you may still receive a statement for your active account – please check your email if you receive your statement electronically.
It will be more difficult if you don’t live at the same address and can’t find any old statements, but don’t give up. There are several ways to search for abandoned 401(k) accounts online.
Gammon recommends starting with National Unclaimed Pension Registrya free national database maintained by the Penchecks Trust. All you need to do is provide your Social Security number.
If this doesn’t work, try Free Employee Retirement Income Security Acta database of Employee Retirement Income Security Act Form 5500, the annual benefit report that companies must file each year. You must register to use the site, but it’s free. FreeERISA may also be able to help you find a 401(k) that has been rolled over to an IRA. The Department of Labor also has some search tools that can help, including its own 5500 table search and a Abandonment Plan Databasewhich contains information about discontinued 401(k) plans.
The two databases are not the most extensive, Gammon said, and they are not always user-friendly.
There are also paid services that can help with this task, such as Meet the Beagle and capital. Just be careful of sneaky fees.
What should you do with the money in your old 401(k)?
If you find you forgot about your 401(k), here are a few options you can consider:
Keep the money in your old account
If you don’t plan for retirement, it may remain in your existing account. It will still accrue interest and continue to grow, but since you can’t contribute to it, you’ll miss out Earn more with compound interest. You may also be required to pay a monthly or annual maintenance fee to maintain your account.
If you’re between jobs or don’t yet qualify for benefits at your new workplace, this may still be a good option. But be sure to keep track of important account information, including the plan provider, its contact information, and your account number. Check the statement regularly for any updates to the plan.
Roll it into a new retirement account
In most cases, it makes sense to roll your 401(k) or IRA into your new employer’s workplace retirement plan. As long as you include it in the same type of plan (pre-tax vs. post-tax), you won’t incur any tax penalties on it.
If your new employer doesn’t offer a 401(k) option or you’re changing jobs, you can also roll your 401(k) into a traditional Individual Retirement Account (IRA). A traditional IRA has a Minimum contribution limit Than 401(k) – $7,000 for IRA and $23,000 for 401(k) in 2024 – but Both will reduce your taxable income.
You can continue your old account online, by phone, or via live chat, depending on the plan provider. In some cases, you may receive a check from your old provider that you need to contribute to your current retirement plan Avoid tax penalties for 60 days.
Think twice before rolling your 401(k) into a Roth IRA. 401(k)s and traditional IRAs allow you to contribute pre-tax funds to a Roth IRA and after-tax funds to a Roth IRA. If you roll your 401(k) into a Roth IRA, you’ll need to pay taxes on the amount transferred during tax season.
cash it in
You may decide to cash out your 401(k) when you leave your job, but experts strongly advise against doing so. If you do this before age 59 1/2, you may face a 10% tax penalty and be required to pay income tax as a lump sum. If you have less than $1,000 in your retirement account, automatic withdrawals may be made. Plus, when you reach retirement age, your savings will decrease. If you have less than $1,000 in your retirement account, automatic withdrawals may be made.
Still have questions? Before deciding how to use your funds, discuss your options and tax considerations with a financial advisor or accountant.
