Do you have a long-lost retirement account left with a former employer? Maybe it's been so long that you can't even remember? With over 24 million "forgotten" 401(k) accounts holding roughly $1.35 trillion in assets, even the most organized practitioner may be surprised to learn of their unclaimed "found" money.1
What are "Forgotten" Retirement Accounts?
Considering that baby boomers alone have worked an average of 12 jobs in their lifetime, it can be all too easy for retirement accounts to get lost in the shuffle.2 Think back to your first job in the healthcare industry. Can you remember what happened to your work-sponsored retirement plan? If you're even slightly unsure, it's time to look for your potential "forgotten" funds.
Retirement Plan Account Types
Before you search, let's review the most common types of work-sponsored retirement accounts available to practitioners.
- 401(k) - This company-sponsored retirement plan allows employees to contribute a portion of their wages to individual accounts. Some employer plans include automatic enrollment for new employees, so it's possible you may have contributed money without being aware of it.3
- 403(b) - This is a retirement vehicle offered by non-profit hospitals and certain 501(c)(3) tax-exempt organizations such as public schools. Similar to a 401(k) plan, a 403(b) plan lets employees defer some of their salary into individual accounts. The deferred salary is generally not subject to federal or state income tax until it's distributed. If you've ever been employed by a public school, college, university, church, or non-profit, you may have been offered a chance to participate.4
- Defined Benefit Plan - Sometimes known as traditional pensions, which promise the participant a specified monthly benefit at retirement. Often, the benefit is based on factors such as the participant's salary, age, and number of years worked for the employer.5
💡Once you reach age 72, you must begin taking required minimum distributions from your 401(k), 403(b), or other defined-contribution plans in most circumstances. Withdrawals from defined-contribution plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
Starting Your Search
One of the best ways to find lost retirement accounts is to contact your former employers. If you're unsure where to direct your call, the human resources or accounting department should be able to check their plan records to see if you've ever participated. However, you will most likely be asked to provide your full name, Social Security number, and work dates, so be sure to come prepared.
If your former employer is no longer around, look for an old 401k statement. Often these will have the contact information for the plan administrator. If you don't have an old statement, consider reaching out to former coworkers who may have the information you need.
Even if these first steps don't turn up much, they can help you gather important information.
Websites to Check
Next, it's time to take your search online. Make sure you have as much information as possible and try the following resources.
National Registry of Unclaimed Retirement Benefits - This database uses employer and Department of Labor data to determine if you have any unpaid or lost retirement account money. Like most of these online tools, you'll need to provide your Social Security number, but no additional information is required.6
FreeERISA - If your forgotten account was worth more than $1,000 but less than $5,000, it might have been rolled into a default traditional Individual Retirement Account (IRA). Employers create default IRAs when a former employee can't be located or fails to respond when contacted. You can search for 401k and IRA accounts for free using this database, but registration is required.7
Once you reach age 72, you must begin taking required minimum distributions from a Traditional IRA in most circumstances. Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
The U.S. Department of Labor - Finally, the department of labor tracks plans that have been abandoned or are being terminated. Try searching their database to find the Qualified Termination Administrator (QTA) responsible for directing the shutdown of the plan.8
💡Once you've found your retirement account, what you do with it depends on the type of plan and where it's held. Your location also matters. Depending on where you live, rules and regulations may differ.
No matter what you decide, be sure to have a financial plan in place so you can develop a strategy for your newfound money. Whether it becomes a family trip, an investment in your own practice, or maybe that vacation home you've always wanted, you worked hard for that money, so you should enjoy it!
This content is developed from sources believed to be providing accurate information and provided by My NP Advisor. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.