Why You Should Track Down Your Old 401(k)s Now

When putting winter jackets in deep storage for the season, I'm that person who doesn't bother to clean out the pockets. I just want the cold weather over and done with and out of my sight completely. Which is why, come fall, I experience a bonanza of found money: a handful of singles in my puffer, a few rumpled fives and 10s in my anorak, and—ka-ching—usually a crisp 20 (or two!) in the Napoleon pocket of my wool coat.

For too long, my retirement planning resembled my off-season coat storage. In my 20s and 30s, as I played a busy game of career hopscotch not entirely uncommon in my field, I'd dutifully plunk a few thousand into my employer-sponsored 401(k) plans. And every few years, when I got a new job, I'd put the old job in deep storage without getting the money out of my pockets. Unlike coats, though, which come out again half a year later, my various 401(k)s just sat there for decaaades.

Some of the plans predated online banking and locating the account numbers always seemed like such a high hurdle. Phone calls would be involved, as well as endless hold times listening to synthesized light rock. But then I did the quick calculus: If I withstood a few hours of frustration now and tracked down my old 401(k)s, I could get all my assets into a retirement account at my bank, and let that compound interest start to rack up—in the same spot, on the same statement, behind the same password!

A Very Common Situation

As it happens, I am hardly the only person to leave money in various old accounts. In the past decade, 25 million Americans have lost access to retirement accounts by changing jobs.

"It's like leaving your money with someone you're divorced from," says Zaneilia Harris, a certified financial planner and the president of Harris and Harris Wealth Management. Granted, with a 401(k), the money is still yours, and the fee-free total amount still gains interest. But you don't have easy access to it, and you're not adding to its total.

If I was being lazy by not hunting down the money, at least I wasn't being totally irresponsible. Had I taken out the money as soon as I left the old job and spent it, or put it in a savings account, I would have been hit with a huge tax penalty.

How to Fix It

To avoid owing Uncle Sucker, you have three options: "Leave the funds in the account, move them to the 401(k) at your new job, or roll them into an IRA at another financial institution," Harris says. Trust me—unless you speak fluent investmentese, you want a financial adviser for this chore.

Since I was moving all the funds into an IRA at my longtime bank, I got help from my financial adviser there, whose name is Vinita. But you can also hire an independent (and unbiased) adviser and pay an hourly rate, a flat fee, an asset-based fee, or a retainer rate, Harris says.

The process started, as I had feared, with picking up the phone—calling the HR departments at old jobs and finding out which firms had my money. (You can also check the National Registry of Unclaimed Retirement Benefits at unclaimed retirement benefits.com.)

Then the fun kicked in: After conferencing in Vinita, I called the various firms (hello, Fidelity and T. Rowe Price!), armed and ready to verify my identity and request a check. Whenever the service reps asked me something I didn't know, Vinita stepped in and translated. The account closing checks were made payable to the mutual fund I'd deposit them into, care of me. When I expressed my disbelief that this process actually involved snail mail and paper checks (isn't Elon Musk about to put a tourist on the moon?) and my fear that porch pirates would abscond with my retirement, Vinita pushed to get the checks sent with tracking numbers.

One hour on the phone and two business days later, I was in possession of a handful of checks that did indeed add up to almost $10,000. I then needed to bring that money to the bank to deposit into my IRA. Because I was this far in—and didn't want to take another chance on the mail or pay for overnight shipping—I chose to hand deliver the checks to Vinita. I'll give you exactly one guess about where I kept them on my way to the bank. In my jacket pocket.