How many jobs have you had during your lifetime? Did you have a 401(k) at any of these jobs? What happened to the 401(k) when you left the company? Do you remember?
Beginning in 2018, the Pension Benefit Guaranty Corp. (PBGC), a federal agency which already has a searchable database for pensions, plans to include 401(k) accounts in its searchable database. According to “FOUND: YOUR FORGOTTEN RETIREMENT ACCOUNTS,” an article in the November 2016 issue of AARP BULLETIN, “Under the voluntary service, businesses which are closing could transfer stranded accounts to the PBGC or send the agency information to be added to a database. The agency estimates that 24,000 defined-contribution plans are ended each year, mostly at smaller employers.”
In June, Senator Elizabeth Warren of Massachusetts sponsored a bill with Senator Steve Daines of Montana to create a “retirement savings lost-and-found,” a searchable database for abandoned retirement accounts. This bill is awaiting action by Congress.
It is very important to keep track of your retirement accounts throughout your working career. Every account, no matter how small, adds up. You will need this money in your retirement years.
What should you do with your 401(k) when you leave a company? Experts advise anyone with a 401(k) from a former employer to roll it over to an IRA or a current 401(k), to avoid losing money. Having too many small accounts just complicates your life.
Make sure the old account is set up for your current circumstances. If you were married when you had the account, your spouse would automatically be the beneficiary unless he signed off on a beneficiary designation form to remove himself. If you are divorced now, you need to change the beneficiary election form. Contact your IRA or current 401(k) plan to get this done correctly.
Your 401(k) money will be a very important part of your income during retirement. The new searchable data base could help you get your financial affairs in order.
—By Karen Centowski