Lost and Found: Clients May Have Retirement Wealth Hidden Away

Ready or not, here I come! 

We all loved playing hide-and-seek as kids. It’s less fun when it comes to tracking down old retirement accounts. 

Left-behind 401(k)s are part and parcel of retirement savings for many of us, with median tenure in the US workforce now standing at 4.1 years, per the Bureau of Labor Statistics. The figure implies a significant number of job changes during the career of the typical worker, who now relies on defined-contribution plans and IRAs to save for retirement. But even financially savvy clients may not realize they have an account from a job they haven’t thought about in years. The dynamic gives advisors an opportunity to deliver better outcomes for forgotten 401(k)s. 

“The reality is there are billions of dollars sitting in accounts your clients may not have chosen and don’t know exist,” said Romi Savova, founder and CEO of the retirement account consolidation service PensionBee.

Good Intentions

Beyond the passage of time and the changing of jobs, well-meaning public policy is part of the reason why accounts can get misplaced. These days, many people are automatically enrolled in a retirement account at their new employer. That’s a great thing, Savova said, but if they don’t stick around long and save less than $7,000 before departing for yet another new job, the account can be automatically swept out of the plan and into a rollover IRA. That adds a layer of complexity to any future search for left-behind accounts. Automatic rollover IRAs are on track to grow from more than $20 billion today to $43 billion by 2030, Savova said.

Research published by Empower in October backs that assessment: 

• More than a third (34%) of Americans said they may have lost track of old retirement savings. 
• The figure rises to half of Gen Z and 45% of millennials. 

The research suggests shorter-term financial priorities like paying monthly bills and managing debt take precedence over keeping tabs on old retirement accounts. Likewise, finding an old account that has been swept to an IRA provider only solves part of the problem. These accounts often start losing value thanks to a combination of high account-opening fees, monthly maintenance costs and allocations to cash or low-risk investments, so taking some action is often warranted, Savova said. 

Support from Uncle Sam. A resource for retirement savers searching for old accounts is the Retirement Savings Lost and Found Database created by the Department of Labor’s Employee Benefits Security Administration. It was established as part of the Secure 2.0 Act of 2022 and serves as a hub to find lost or forgotten benefits, including both defined-pensions and defined-contribution accounts like 401(k)s.