Welcome to Day 15 of our 30-Day Easy Money Makeover! Every day in April, we’re bringing you strategies to help you improve, and feel more confident about, your money situation. Follow along and see the rest of the calendar here.
As you job hop over the course of your career, it pays to manage old retirement accounts.
There’s one big reason to keep tabs on that money: You could lose it otherwise.
Seventeen states are currently holding on to about $35 million in unclaimed retirement savings, according to a Government Accountability Office report from earlier this year. (The rest of the states did not provide data.) That follows a 2018 GAO analysis estimating that there are more than 25 million “missing participants” who left behind a workplace plan from 2004 through 2013.
Another 80,000 people have earned a pension but haven’t claimed it—with more than $400 million total at stake, according to the Pension Benefit Guaranty Corporation.
There are a handful of factors that contribute to lost accounts, says Mark LaSpisa, a certified financial planner and the president of Vermillion Financial Advisors in South Barrington, Illinois.
Users may simply forget about smaller balances as they juggle multiple retirement accounts—after all, the average worker holds roughly 12 jobs from age 18 to 50, according to Bureau of Labor Statistics data. They may not realize they earned a small pension, or have a little cash waiting from, say, a profit sharing that posted after they left the company.
If you had less than $5,000 in the account, your former employer can also opt to eject you from the plan, rolling your balance into an IRA with a plan custodian of its choosing, he says. If you haven’t stayed in touch, you might not realize that money wasn’t where you left it.
Plus, on the company side, contact information for former workers quickly gets out of date—preventing them from jogging your memory. “It’s only a matter of time before the employer can’t find that employee anymore,” he says.
Even if you don’t forget an account, there are more mundane reasons to periodically check in. Your portfolio could be in investments that no longer track with your goals, for example.
So what should you do with an old workplace retirement account? Check out our resources:
Broadly speaking, you have three solid options: Leave it with your former employer, roll it into your new workplace’s plan, or roll it into an IRA. Our guide helps walk you through which choice makes the most sense for you.
OK, so technically, you have a fourth option—that is, cashing out the account. But it’s not something experts recommend. Left invested, even a small balance could afford you an extra six-figure sum by the time you reach retirement.
Even if you decide to leave some of your old accounts alone, take a minute to do a little upkeep. Make sure your contact information on each is up to date.