And in November, the financial services industry established a system that automatically moves old retirement accounts into the plan of the worker’s new employer. The Portability Services Network automatically matches Social Security numbers on workplace accounts, obtains the worker’s consent to move the money and automatically deposits money from the old account into the new employer’s plan, using technology from Retirement Clearinghouse. Employees can check for missing accounts on the Retirement Clearinghouse website at rch1.com by using their last name and last four digits of their Social Security number.
The voluntary Portability Services Network includes the plan administrators Alight Solutions, Empower, Fidelity Investments, Principal, TIAA and Vanguard. These financial services firms administer and hold the records for employer plans and are expected to encourage the employers sponsoring their plans to participate. Besides helping savers avoid forced I.R.A.s, the network would eliminate cashing out accounts with balances of $1,000 or less, Mr. Williams of Retirement Clearinghouse said.
“There’s no size limit” on the accounts that can be automatically moved, he said. “We’ll take balances down to a penny. Most of these plans are cashing out balances of less than $1,000, and the sponsor is left with a huge uncashed check problem. The industry is littered with these uncashed checks.”
Handling your old 401(k)
Workers are free to move their old accounts without a network or federal database, and have several options. The goal, financial planners say, is to keep most or all of the money together, where the investments can be coordinated and the performance easily monitored. Here are points to know.
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If a new employer has a 401(k) or similar plan, that plan’s administrator can typically handle combining your accounts. This would allow you to take a loan against the account balance, if that option is offered. Loans can be taken only from your current employer plan.
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If a new employer doesn’t offer its own plan or you have stopped working, your old plan can be rolled into an I.R.A., a transfer most financial services providers can handle.
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If your plan balance totals more than $7,000, the money can be left in the former employer’s plan. Account holders should register online to get statements and to manage their investments.
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Workers with a balance of less than $1,000 will most likely find themselves cashed out of their old plan. To avoid paying taxes and potential early-withdrawal penalties, deposit that money into an I.R.A. within 60 days. The deposit must cover the entire 401(k) balance withdrawn, including any money withheld for taxes. (That money can be reclaimed on the account holder’s next tax return.)
“If the balance is less than $1,000, my advice is don’t let it cash out. You can roll it over,” said Jeanne Fisher Sutton, a certified financial planner in Nashville known as 401(k) Lady on YouTube. “Many, many people are losing track of their 401(k)s, and it’s so hard to find. If you’re leaving an employer, roll it over and be proactive about your account management.”
Ms. Featherngill, the Comerica Bank executive, finally transferred her old 401(k) from Wells Fargo, two years after she left.
