The way the average American is employed has changed through the years. Parents of the “baby-boomer” generation typically worked for the same employer when they started working in their 20’s and continued working until they retired in their mid-60’s. They also had access to and contributed to one retirement plan offered by their employer.
However, things are different today and have been this way over the past 20 years.. Each year millions of individuals change jobs leaving behind qualified retirement plan accounts such as 401(k) and 403(b) accounts that they contributed to.
There are federal employees and retirees who participated in employer-sponsored qualified retirement plans before leaving their jobs and consequently joining federal service. During their years in federal service, they contributed to the Thrift Savings Plan (TSP). They may not be aware of their retirement plan distribution options. As time went on, they may have lost track of the retirement plans they previously contributed to. Also, they may not be aware of the fees they are paying for keeping their qualified retirement account with their previous employer.
According to the company Capitalize (https://www.hicapitalize.com) (a company which helps individuals locate and rollover qualified retirement plans for the purpose of consolidating an individual’s retirement accounts) it is estimated that as of May 2023, there are 29.2 million “forgotten” qualified retirement plan accounts such as 401(k) accounts. The company Capitalize research showed that the number of forgotten 401(k) plans increased by over 20 percent since May 2021, driven by a period of heightened job switching (“The Great Resignation” period during 2021 and 2022) with 3.8 million and 4.4 million accounts left behind with former employers during 2021 and 2022, respectively.
The value of the lost 401(k) accounts is substantial. As of May 2023, the 29.2 million forgotten 401(k) accounts are estimated to hold approximately $1.65 trillion in retirement assets, representing 25 percent of all 401(k) plan assets. This is a significant increase from May 2021, when 24.3 million forgotten accounts held $1.35 trillion in retirement assets.
How to Search for a Lost Qualified Retirement Account
SECURE Act 2.0 (which was passed into law during 2022) tasked the Department of Labor with creating a new database in order to help individuals find old pension and retirement plans. That database, called the Retirement Savings Lost and Found Database, was launched at the end of 2024. The Retirement Savings Lost and Found Database is managed by the Employee Benefits Security Administration (EBSA) and found at https://lostandfound.dol.gov.
The Retirement Savings Lost and Found Database is useful only for individuals who have worked for a private sector employer and who participated in a workplace retirement plan.
If an individual has worked for employers only in the public sector (this includes federal, state and local governments) or religious institutions, then the individual will not find the Retirement Savings Lost and Found Database to be of use. This is because the database does not provide information on retirement plans sponsored by government (federal, state and local) or religious organizations (houses of worship, parochial schools and seminaries).
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To access the Retirement Savings Lost and Found Database, an individual must have a valid ID-proofed Login.gov account. The Login. gov is used to access the database and performs a search using the individual’s Social Security number.
The Website can help individuals find retirement plans linked to an individual’s Social Security number sponsored by private sector employers and unions. These retirement plans include defined-benefit pension plans and defined contribution plans such as 401(k) and 403(b) retirement plans. The Website cannot help individuals find individual retirement accounts (IRAs).
If an individual does not want anyone to be able to access data linked to the individual’s name and Social Security number, then the individual can opt out by filing an online form at: https://www.askebsa.dol.gov/WebIntake/Home.aspx#1f
Limitations of the New Database
The Retirement Savings Lost and Found Database is relatively new and became available on December 27, 2024. EBSA began collecting information from retirement plan administrators in November 2024. This means that the information that is currently available is limited. Those individuals who are searching for their retirement plan but cannot find it now are advised to check back periodically as the database grows in use by plan administrators.
Should Federal Employees and Retirees Consolidate Their Retirement Accounts?
There are many federal employees who are nearing retirement age and who have likely accumulated various retirement accounts from the various stages of their working lives. While having multiple retirement accounts can offer flexibility, it can also result in high fees and challenging management.
Here’s a brief overview of your options. For more detailed guidance tailored to your specific situation, please consult us.
- Leave the money in your former employer's plan (if allowed)
- Pro: You may prefer the investment options available in the plan, and there may be no fees for leaving the funds there. This is not a taxable event.
- Roll over the assets to your new employer's plan (if available and permitted)
- Pro: Consolidates your retirement savings and keeps a larger sum working for you. This is not a taxable event.
- Con: Not all employer plans accept rollovers.
- Roll over the funds into an IRA
- Pro: Offers a wider range of investment options, allows for account consolidation, and is not a taxable event.
- Con: May involve fees, and some plans may charge termination fees.
- Cash out the account
- Con: This is a taxable event and could reduce your retirement savings. If you're under age 59½, you’ll also face a 10% early withdrawal penalty in addition to income taxes.
Consider your long-term goals. What are your financial objectives for retirement? Does consolidating your accounts support those goals, or is it better to keep them separate?
In short, consolidating retirement accounts can be advantageous for those federal employees and retirees who have participated during their working careers in multiple employer-sponsored retirement plans. These advantages include lower overall costs, simplified management and more diversification. Needless to say, every situation is unique, and consolidating retirement accounts may not be the right move for every federal employee and retiree who feels overwhelmed by the multiple retirement accounts they own. These employees are encouraged to explore their options with a trusted financial advisor who is knowledgeable about employer-sponsored retirement plans.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
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Ed Zurndorfer, EA, ATA, CFP®, CLU®, ChFC®, CEBS®, ChFEBC℠: Federal Employee Benefits Expert
A former career Federal employee, Ed has published a staggering 1,200+ separate articles on Federal Benefits and Retirement!
Just “Google” his name, and you are likely to find a plethora of sites that contain his writings. Drawn to its mission to reach, teach
and serve Feds, Serving Those Who Serve is the only financial planning practice with which Ed has chosen to affiliate in over
20 years teaching. In addition to conducting Federal Benefits seminars for Serving Those Who Serve, you can find Ed’s
writings here on our blog in the FedZone, and on Fed-Soup, MyFederalRetirement, FederalNews Radio and NITP.
He is a member of the Maryland Society of Accountants, the National Association of Enrolled Agents, the International Society of Certified Employee Benefits Specialists, the Financial Planning Association, the National Association of Health Underwriters,
and the Society of Financial Service Professionals. Since 1999, Ed has taught many thousands of Federal employees about
their benefits, in person and at Federal agencies all over the country. Ed is a true national treasure.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.