Trying to Find a Forgotten 401(k)? Here's How to Track It Down

When you leave your job or get laid off, you typically have a long list of to-dos, including switching health insurance plans, returning equipment, and possibly working out the details of any severance pay. One thing that often gets forgotten: figuring out what to do with the money in your former employer's 401(k).

According to 401(k) rollover firm Capitalize, there were about 29.2 million forgotten 401(k) accounts as of May 2023, representing roughly $1.65 trillion in assets. The number of forgotten 401(k) accounts spiked by about 20% in 2021 and 2022, a period dubbed the Great Resignation because workers were leaving their jobs in record numbers.

Forgetting your old 401(k) is surprisingly easy to do. In this article, we'll explain how to locate your lost 401(k) money.

What happens to lost 401(k) money?

If you left a job at a company that still exists, your money could still be sitting in your old employer's 401(k) -- we'll discuss what happens to old 401(k) money if your former employer folded shortly. Most employers let you keep your money in the plan even if you no longer work there if your balance is over $5,000.

But if your balance was less than $5,000, your plan administrator could force you out of the company 401(k). Here's what happens:

• If the balance was between $1,000 and $5,000, the plan administrator can roll over your balance into an individual retirement account (IRA) in your name.
• If the balance was less than $1,000, the plan administrator can distribute the funds to you directly by cutting you a check. When this happens, a portion of your balance will usually be withheld for the IRS.

If your company closed or filed for bankruptcy, your 401(k) money still belongs to you. Retirement assets are generally protected from creditor claims. You'll typically receive a notice of plan termination from the plan administrator. But if you don't take action, the plan administrator could distribute the funds to you.

If your plan administrator makes a distribution to you -- either because you had less than $1,000 or the plan was terminated -- and it can't locate you, the money will eventually go to your state's unclaimed property division. Unfortunately, if your plan makes a distribution and you're younger than 59 ½, you could owe taxes and a 10% early withdrawal penalty.

Where to find old 401(k) money

You have several options for locating old 401(k) money. If the company still exists, you can start by asking its human resources department for the name of its plan administrator. But if that proves futile or the company is no longer around, here are some resources for searching:

• National Association of Unclaimed Property Administrators (NAUPA): The NAUPA maintains a database at missingmoney.com that lets you search for unclaimed property that's in the hands of all 50 states, the District of Columbia, and Puerto Rico. While you're searching, you could discover other forgotten money, like old security deposits or bank accounts.
• National Registry of Unclaimed Retirement Benefits (NRURB): The NRURB database at unclaimedretirementbenefits.com is maintained by PenChecks, a state-chartered retirement distribution service. Some employers register former employees with old 401(k) money if they've been unable to locate them.
• U.S. Department of Labor: The Department of Labor's Employee Benefits Security Administration allows you to search for a plan that's been terminated or is in the process of being terminated.

Eventually, it will be simpler to find old 401(k) money. The SECURE Act 2.0, which passed in late 2022, directs the Department of Labor to establish a lost-and-found database for employer-sponsored retirement accounts by the end of 2024.

What to do with your old 401(k)

If you've recently left your job or expect to soon, it's important to determine what to do with your 401(k). Your options are as follows:

• Keep the money with your old employer. Check with your plan administrator about whether you're allowed to keep your money in the company 401(k). Keep in mind, though, that when you have multiple retirement accounts with former employers, it's easier to lose track of your 401(k).
• Roll it over into a new employer's 401(k). If you have a new job lined up, check with the new employer about whether you can roll over your 401(k) into its plan.
• Roll it over into an IRA. You can roll over your money into an IRA account with the brokerage of your choosing. If you go this route, ask your plan administrator to transfer the money directly to the IRA provider. If it cuts you a check, you'll need to deposit it into a qualified retirement plan to avoid having it treated as a distribution.
• Cash out. This is typically the worst option, as you'll owe taxes and a 10% penalty if you haven't reached age 59 ½. Plus, you'll miss out on invaluable compounding time in the market.

Be sure to research your options for your 401(k) immediately after leaving jobs and be on the lookout for any notices from your old company's plan administrator. Tracking down an old 401(k) can be a serious headache. The sooner you take action, the better.