Have You Misplaced a Retirement Plan?

Wouldn’t it be nice to find some money sitting in a long-forgotten retirement account somewhere?

It’s not hard for workers to lose track of an old account as they move from employer to employer, often across state lines. Each state government keeps a repository of unclaimed property – most have been doing this since the 1980s – and residents and former residents can check online through a simple name search in the state’s unclaimed-accounts database.

But not everyone takes the trouble to search for the money or is even aware it exists. So billions of dollars have accumulated nationwide in various types of unclaimed accounts, including retirement plans, insurance policies, trusts, and brokerage and bank accounts – so much so that firms have sprung up that will do the legwork required for individuals to claim their money. But little has been known about how much sits idle in unclaimed retirement accounts.

A new study estimates conservatively that about $38 million, accumulated over many years in some 70,000 retirement savings plans nationwide, had not yet been claimed in the states’ property accounts as of 2016. Most of these are 401(k)-style plans but they also include IRAs and pension checks.

The average account value is only about $550. But the largest ones are anywhere from $5,000 to $13,000, which could be meaningful to retirees who are struggling financially.

The funds in this analysis are limited to retirees over age 74, the age at which retirement accounts are generally classified as unclaimed.

The $38 million estimate for the accounts is a lower limit, because employers don’t necessarily turn over their workers’ unclaimed plans to the states. The estimate also doesn’t include defunct company pensions taken over by the federal government and never claimed by the worker.

Proposals have been floated over the years to create a central database to make it easier for individuals around the country to connect with their lost funds.

The researchers highlighted Wisconsin’s strategy: the state matches the Social Security number on the unclaimed account to the resident’s current address and just sends out a check – “without them having to undergo any formal process.”

To read the study, authored by Corina Mommaerts and Anita Mukherjee, see “Frictions in Saving and Claiming: An Analysis of Unclaimed Retirement Accounts.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.