Employees are transient. Look at your own life: Even if you're in your 20s or early 30s, it's possible you've already worked with several different employers. One report from the Bureau of Labor Statistics stated that the boomer group studied held an average of 11 jobs while they were between the ages of 18 and 44.
In the process of all of these job changes, though, we're leaving behind lots of 401(k) investments.
Each employer-sponsored plan has different rules, but former employees can generally leave sums exceeding $5,000 in a 401(k)-like plan when they move to new job opportunities. People with several former employers may have several employer-sponsored retirement plan accounts. Even if you're not contributing to an old account, the vested money is still yours.
Over time, and after a few employment changes, details may run together. It becomes harder to keep track of each retirement account you own.
Create a simple system to track every individual account. Save everything you receive for each account. If you have e-mailed statements, create a unique email folder on a personal--not professional--e-mail account for each retirement account.
Check with each plan to ensure you have current contact information and account details and to make sure they have current contact information on you. It will be easier to find your money if you don't wait years to track it down.
If you're reading this and wishing you'd started keeping track of your retirement money earlier, you're not alone and all is not lost. Former employers are legally required to protect your plan dollars. Just remember that acting sooner is easier.
Begin by calling your former employers. Explain your situation, and you should be directed to someone who can help. However, you may have difficulty finding former employers. Some may not even exist anymore.
The Pension Benefit Guaranty Corporation is a government entity that ensures pensions and manages some pensions for employers that no longer exist. They have resources to help people find pension money they're owed.
Separately, the Pension Rights Center helps individuals find lost pensions and 401(k)-like plans and dispute payments. In addition, the Department of Labor has an Abandoned Plan search function.
The easiest way to keep track of your retirement money is to minimize the number of accounts you have.
In many cases, you can roll your old 401(k) to your new employer's 401(k) or to an IRA. If you've left several employers, you can probably roll the funds from several employer-sponsored plans into one IRA.
Prior to leaving an employer, it's helpful to figure out the rules and timeframes that govern your 401(k) investments. While you may be allowed to leave money there, some plans require that you move smaller dollar amounts; and they'll cash out your funds if you don't roll your savings to another qualified account like an IRA or your new employer's plan.
Remember to gather and keep the documentation regarding your retirement plan when you leave your employer. You may not be ready to make a decision about those funds at the moment, but you'll want access to information when you are.
Scott Holsopple is the president and CEO of Smart401k, offering easy-to-use, cost-effective 401(k) advice and solutions for the everyday investor. His advice has been featured on various news outlets, including FOX Business, USA Today and The Wall Street Journal.
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