December 4, 2022

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More than 20% of your 401(k) plan money goes missing — here's how to get your money back

More than 20% of your 401(k) plan money goes missing — here’s how to get your money back

If you are one of the many workers who quit their jobs in Register During a pandemic, you may have forgotten your 401(k) plan along the way.

Upon job termination, you can either leave your 401(k) with your old employer, cash it out, convert it to an Individual Retirement Account (IRA) or combine it with your new corporate 401(k) plan.

Often, workers want to leave their old employer’s plan behind when they change jobs. However, over time, it can be forgotten or even lost.

As of the end of 2021, there were approximately 25 million forgotten 401(k) accounts worth about 20% of all 401(k) assets in the United States, according to Estimates by Capitalizea financial services firm specializing in 401(k)s.

Since that money usually stays invested, it can add up to a lot of money: The average balance of a forgotten 401(k) account is $55,400, according to Capitalize analysis. Plus, you’re likely to pay unnecessary administrative fees to keep additional 401(k) accounts open, which is why incorporating 401(k) plans can be a smart move.

To avoid losing that money, you’ll need to make sure you keep track of all your plans.

How to Trace a 401(k)

The simplest way to track down a misguided 401(k) is to call your previous employer’s human resources department and ask if you still have a 401(k) plan left. Or, if you still have old data, it should include your plan’s account number, as well as the plan administrator’s contact information.

In some cases, the amount of money held in your account may affect where the money ends up.

If the total money in your missing 401(k) account is less than $1,000, your old employer is allowed to cash it. In this case, the company may have already mailed you a check. If the sum of the funds is $1,000 to $5,000, they are allowed to transfer your plan into an IRA for you.

Either way, your old employer should be able to confirm whether they sent you a check or provide details on how to access your new IRA.

However, sometimes employers merge with other companies, or the company you once worked for no longer exists. This can make tracking down a errant 401(k) plan more difficult.

Fortunately, there are searchable databases that you can use to find old 401(k) plans that you may have forgotten about.

You can start with National Register of Unclaimed Pensions, a secure site that allows you to search for lost plans using your Social Security number. The National Association of Unclaimed Property Managers is also running a file Database Lets you search for plans by first and last name.

If you believe your employer rolled your 401(k) into an IRA, you can use frizza to track him down. If you are still unlucky, dol Abandoned plan database It may provide some updated information about plans that have been discontinued or are about to be discontinued.

Once you select your plan, you can stick with what you have or ask the plan administrator for a file direct extension Plan for your new employer. You can cash it out, too, but you’ll face income taxes on that money, plus a 10% withdrawal penalty if you’re under 59½.

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