It's hard to believe that in these challenging economic times anyone could forget about money they had earned, but when leaving a job sometimes 401(k) funds get left behind. The good news is that there are resources for tracking down these forgotten employer-sponsored retirement savings accounts.
It can be relatively easy to find your own 401(k) plan, or that of a deceased family member, using online resources.
The 401(k) Help Center (www.401khelpcenter.com) provides tips on locating a 401(k), which is protected by federal laws. Rick Meigs, president of the 401(k) Help Center, offers these steps to find your 401(k):
1. With full name, Social Security number and employment dates in hand, contact the former employer to verify that you participated in the company's 401(k) program.
2. If the former employer no longer exists due to a bankruptcy, merger, or relocation, an old 401(k) statement can help you find contact information for the company that administered the plan. If you can find one, call and ask the company for information on your account. "The plan administrator is the bookkeeper on the plan, and they should have information," Meigs said.
3. Call a few fellow former employees/co-workers to see if they have the contact information for the administrative firm, if you cannot find this information on your own statements.
4. Because 401(k) plans are required to file an annual "Form 5500" with the United States government, you can search using your name at www.freeERISA.com and once you have located the plan it should have contact information for the firm that administered the plan. "401(k) plans are regulated at the federal level," Meigs explained. "So the rules are the same regardless of the state you are in."
5. Check the National Registry for Unclaimed Retirement Benefits at www.unclaimedretirementbenefits.com to see if your former employer listed you as a missing participant. The registry is a nationwide secure database listing of retirement plan account balances that have not been claimed. The website is designed to help match employers with abandoned or forgotten employee retirement account balances with former employees.
6. The United States Department of Labor also has an online resource for lost 401(k) plans, www.askebsa.dol.gov/AbandonedPlanSearch, and can provide administrator contact information.
Once the detective work is complete and the account is located, what next? It depends whether this is your personal account or that of a deceased relative.
The process for locating the 401(k) plan is the same for an individual or when looking for someone else's account. "As far as withdrawing the funds, there will be additional steps generally tied to the probate process for the deceased," Meigs said. "They should seek legal advice once they locate the plan."
Then you're almost in the free-and-clear. "Once you locate your account, there are no restrictions on the funds," Meigs said. "You can withdraw them or roll them over to an IRA. If you withdraw the fund — as opposed to doing an IRA rollover — the funds will be subject to income tax and maybe an early withdrawal penalty."
It is also an option to roll the old 401(k) into your current 401(k) with your new employer, as well as into an existing or new IRA (Individual Retirement Account), and these are all tax-free options.