Have you ever left a job and forgotten about your retirement plan? It’s a common scenario, especially if you’ve had multiple jobs over the years. But fret not, a new federal initiative is in the works to help you locate any forgotten retirement funds.
In December 2019, the SECURE 2.0 Act was passed, containing provisions aimed at promoting retirement savings. One of the key aspects of this legislation tasked the Employee Benefits Security Administration, under the Department of Labor, with creating a database to assist in finding lost retirement accounts. The deadline for establishing this database is set for December 24, 2024.
Lisa M. Gomez, assistant secretary for EBSA, emphasized the importance of ensuring that workers and their beneficiaries receive the retirement benefits they’ve earned. While the database is not yet live, experts are unsure if it will be operational by the end of the year.
Here’s a breakdown of the benefits offered by this database, along with tips on how to locate an old 401(k) and what to do with an old retirement account:
How will the database help?
Trying to track down old retirement accounts, especially from defunct companies or those with minimal online presence, can be a daunting task. The forthcoming federal retirement account database aims to simplify this process, making it easier to reclaim any lost accounts to ensure you don’t miss out on potential savings.
Chad Gammon, a CFP and owner of Custom Fit Financial, pointed out the common scenario of people forgetting about accounts they opened decades ago. The database is expected to streamline this search process and help recover abandoned funds.
How can you find an old 401(k) account now?
While the database is not yet in operation, there are other methods to locate old retirement accounts. If you suspect you have a missing plan, reaching out to the human resources department of your former or acquiring company is a good starting point. Obtaining contact details for the 401(k) plan administrator and contacting them directly can yield results.
In cases where the company no longer exists, scouring old statements or utilizing online tools like the National Registry of Unclaimed Retirement Benefits can assist in locating forgotten 401(k) accounts.
What should you do with the money in an old 401(k)?
If you rediscover a forgotten 401(k), you have several options to consider:
- Leave the money in your old account: While this is a viable choice for interim periods between jobs, be wary of maintenance fees and ensure you monitor the account periodically.
- Roll it into a new retirement account: Transferring your old account to your new employer’s retirement plan or into a traditional IRA without tax penalties can optimize your savings.
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Cash it out: Avoid cashing out your retirement account prematurely to steer clear of tax penalties and decreased savings in the long run.
Before making any decisions, consulting with a financial advisor or accountant is crucial to weigh your options and understand any tax implications.
In conclusion, with the upcoming retirement account database and existing search methods, retrieving lost retirement funds is poised to become more accessible. By taking the necessary steps, you can ensure you’re maximizing your savings for the future.
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