Learn how to find money for financial independence by tracking down old employer retirement accounts.
Finding money through old retirement accounts
If you’re like most employees today, you’ve had a few different employers over your working career. And you may have participated in an employer retirement account. Contributions to an employer retirement account can often be made by the employee (you) through salary deferrals, or by the employer through a match or other contribution.
Old employer retirement accounts can accumulate and get lost over time. Many of my clients find it’s easier to keep track of their retirement assets if they are all in one place, rather than remaining at an old employer’s plan. Get prepared: this can be a time-consuming and complicated process. Don’t be deterred! Finding old accounts is worth your time.
Here are some instructions on how to track down those old employer retirement accounts.
Make a list of your old employers. Look at your resume or your LinkedIn profile to make sure you’ve listed them all.
In addition to your employer, who is usually the retirement “plan sponsor”, you’ll also need to know the “custodian” – the company that holds your money. Over the years, the custodian may change so this can get complicated but don’t stop. It’s worth it to find some hidden resources for your retirement! Make a chart like this to keep track:
Call old employers and associated custodians to ask questions about old accounts.
The objective of these calls is to track down any old employer retirement accounts.
Is your old employer no longer around? Try using a Department of Labor search for retirement plans where you may be able to locate a custodian for your old employer’s plan.
Here are sample scripts to follow when searching for old employer retirement accounts.
Calling your old employer:
Hi, I’m a former employee of (old employer) and I’m looking for old employer retirement accounts. I worked at (old employer) from (year) to (year). Can you direct me to someone who could help me find out whether I have any old retirement accounts from working there?
Calling a potential custodian:
Hi, I’m searching for old employer retirement accounts that might be in my name. Can you search your records for any accounts that I may have with your firm?
Identify where you have accounts.
Hopefully you’ve identified some custodians who have accounts in your name. Hooray! Here’s what to do next.
- Request an account statement that shows your account number, balance, and type of contributions.
- Request instructions on how to transfer the money in the account to the new place (your new employer’s retirement plan). You may need to update your mailing address or email address for correspondence.
A note about terms: Old employer accounts are typically called 401k, 457b, 403b, Simple IRA. However, some employers may have moved your money out of their employer sponsored account and into a personal account in your name. This account could be an IRA or a Roth IRA. Don’t worry, these accounts are still retirement accounts, but they are not sponsored by an employer; instead, they are Individual Retirement Accounts (IRAs).
Now that you have identified your old accounts, figure out what you want to do with it. While you can keep the accounts where they are, many people move the money so their accounts are consolidated and easier to keep track of. There are many pros and cons to this decisions; consult with your financial adviser for information about your situation.
However, let’s assume that you plan to consolidate all your old employer retirement accounts, into a single account that’s easier for you to manage. Assuming all the funds are “pretax” retirement accounts (taxes were not withheld from the initial contributions), they should all be able to be rolled over or transferred into one new location. This can be an IRA account at a custodian of your choosing. Or it can be your new employer’s retirement plan, if your new employer’s plan accepts transfers from old plans.
Contact your new employer or custodian to ask if they accept transfers from old retirement plans. Next, find out what forms are needed in order to initiate the transfer.
Contact the old custodian and tell them you want to move your account from your old retirement plan to a new plan at a different custodian. How can you do that?
A note about terms and process: A “transfer” is typically when one custodian sends the money to a new custodian. There are usually no taxes owed on this transfer. There are three ways the transfer can occur:
- electronically (sometimes called an ACAT transfer)
- paper check made out to the custodian FBO (for benefit of you), mailed directly to the custodian
- paper check made out to the custodian FBO (for benefit of you), mailed to you. When you receive it, you don’t cash the check, but instead you mail the check to the new custodian.
Sometimes, this “transfer” is called a “rollover”. A “rollover” is rolling money from an old custodian over to somewhere else. But there are different types of rollovers. One way is if you can take possession of the money yourself, meaning, a check is mailed to you in your name (not in the name of the new custodian) from the old custodian. Usually, you don’t want to do this because it means you owe taxes on the money right now. There are ways of taking possession of the money then moving that money into a new retirement account, but that is complicated and messy. I’m simplifying here; again, talk to your financial adviser for specifics on your personal situation.
Watch your mail, and watch your new account.
Once you’ve initiated the transfers, watch out to make sure that the money got to the right place. Check your mail to see if you’ve received a check that needs to be mailed to a custodian. Check your new custodian’s account to see if money has been deposited.
Don’t forget this step! Don’t let the newly arrived money sit in “money market” funds or cash if that’s not appropriate for your situation. Instead, invest it per your risk tolerance and personal situation. A simple choice can be a Target Date Retirement fund. These funds have a targeted year of retirement in their name, such as 2045 Target Date Retirement fund. And they automatically adjust the investments over time as you get closer to retirement. Read more here about choosing investments in your employer retirement plan.