Dear Penny: How Can I Find My Forgotten 401(k) Money?

Dear C.,

As an admitted scatterbrain who’s notorious for losing just about everything, I’m pleased to say I have yet to lose a retirement account. But it’s surprisingly easy to do.

People move and change jobs way more frequently than they used to. A March 2018 survey by Boston Research Technologies found that at least 3 million people in the U.S. have missing 401(k) plan money. About one-third of those people are unaware that they even had a retirement account with their old employer. If you were preparing for a whirlwind marriage and a move across the globe, I get why following up on retirement money you weren’t sure even existed wasn’t top of mind.

If you do have 401(k) money, it’s in one of three places: It’s still in your former employer’s plan, it’s in an IRA that was created on your behalf, or it’s in state hands.

Let’s start with the state. That’s where your money would probably be if your balance was less than $1,000. Many plans send you a check to your last known mailing address when they can’t find you and your account has under a grand. After the check goes uncashed for a certain amount of time, typically a year, it goes to the state’s unclaimed property division.

That’s also where your money would likely wind up if the company closed and terminated its plan and you didn’t take action to roll it over. You can hunt for unclaimed property by searching your name on unclaimed.org and clicking on any states you’ve lived in, or MissingMoney.com to do a nationwide search.

You could also find abandoned deposits, refunds or bank accounts just waiting to be claimed. (In fact, Yours Truly was elated to discover a forgotten $81 water deposit on unclaimed.org a few months back.) If you find missing money, you’ll fill out a quick form and you could get your money within a few weeks.

Next, make a list of your past employers and find out who administers their plan. You can search for a current company’s administrator using FreeErisa.com. If the company terminated its plan — for instance, if it closed or was acquired — you can use the U.S. Department of Labor’s Abandoned Property database to find the proper contact. Once you find the administrator, they can tell you whether you have money lying around.

The best-case scenario here is that you have forgotten money and it’s still invested in your old employer’s 401(k) plan. Not only would you get a nice windfall, but your money would have been generating returns for all these years. You could roll it over to an IRA without getting hit with a big tax bill.

The next-best scenario is that your old employer rolled over your account into a special IRA on your behalf. This commonly occurs when your company can’t locate you and your balance is between $1,000 and $5,000, or it’s closing its plan. You wouldn’t owe taxes, but your money would be invested in something super low-risk, like a money market fund, and barely earning enough to keep up with inflation.

The worst-case scenario is that they cut you a check. Not only will you likely have a surprise tax bill to go with that surprise windfall, but your money hasn’t been earning a cent in state hands.

If you do find retirement money that’s in a 401(k) or an IRA that was set up for you, I’d recommend rolling it over to an IRA. It’s much simpler to keep track of your money when it’s all in a single place. Check in on it at least twice a year to make sure that your contact information and beneficiaries are up to date.

We can’t change the past, so I’m not going to spend too much time lecturing you. But if you’re still working and (hopefully) saving for retirement, here are two things I want you to take away.

First, you’ll get the best outcome when you pay attention to your money. It’s essential to know how much you’re saving and earning, and what the tax consequences are.

And secondly, a 401(k) is a great benefit. Just as you wouldn’t take a job without knowing the salary, know what your retirement benefits are before you accept an offer.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.