Keeping Track Of Retirement Plan Assets

By Denise Appleby AAA

In 2010, the Pension Benefit Guaranty Corporation (PBGC) reported that it was holding $197 million in unclaimed pension benefits from terminated defined-benefit pension plans for 36,000 people. Clearly, the problem of losing track of employer-sponsored retirement plans in a job change is not an uncommon problem. If you have assets in retirement plans or even non-retirement assets in accounts with financial institutions, don't leave your hard-earned money behind. In this article we'll show you where and how those gaps can occur.

The Reality
The PBGC report represents only a fraction of hard-earned assets left behind - the reasons for the "abandonment" include the owners' lack of awareness of those benefits, and decedents' failure to inform their beneficiaries about the assets they are designated to inherit. Besides the defined-benefit pension assets transferred to the PBGC, there are those assets in defined-contribution plans belonging to former participants who cannot be located, and IRA accounts for clients whom financial institutions are also unable to locate. The assets in defined-contribution plans are likely forfeited (returned to the plan) and the IRA assets escheated to the individuals' state of residence on record with the financial institution.

Take Your Money with You
If you leave your job and you are eligible to withdraw your retirement plan assets, consider rolling over the balance to an IRA or to the retirement plan maintained by your new employer (see Moving Your Plan Assets?). Though not recommended, even withdrawing the amount and including it in your taxable income instead of rolling it over may be better than leaving it behind. Of course, before you elect to roll over amounts to your new employer's retirement plan, check with the plan administrator that the plan has been designed to accept rollovers.
If you do not know whether you are entitled to benefits, ask your employer. Sometimes individuals accumulate assets in retirement plans without even being aware of it. Causes for that happening include employees not understanding benefits statements and other communication about the benefits.

Maintain a List of Your Assets for Your Beneficiaries
Some individuals keep the identity of their beneficiaries secret for various reasons. Unfortunately, this can result in beneficiaries never knowing about the assets to which they are entitled.

You can, however, avoid this even if you do not want to inform your heirs of their beneficiary status for your assets while you are alive. Maintain a list of the assets and the designated beneficiaries along with the documents to be reviewed after your death. You can include this list in your will or give it to your attorney, executor or other party who will share the information with your beneficiaries.

Tell Your Financial Institution When You Move
It is a good idea to maintain a list of financial institutions and former employers with which you own accounts or assets in retirement plans. That way you know who to inform of your new address when you move.

And even if you do give notice of your new address, don't assume that records are indeed updated. Instead, be cognizant of the mail that you are receiving and what may be missing. If you haven't received something from an institution for some time, it may mean your request for change of address may not have been processed. Or, it may mean the identity or name of your financial institution or former employer has changed as a result of mergers, acquisitions and/or other transactions. By keeping track of your mail, you also keep track of those who hold your assets.

That May Not be Junk Mail from Your Financial Institution

If your financial institution often sends you advertisements for new services and/or products that you usually discard, you may get into the habit of discarding everything except your account statement. However, this may be unwise. Even though your financial institution may send junk mail, it will also send important information such as the name or ownership change of the institution. Be sure to check all mail from these organizations before tossing them out.

Is It Too Late?

If you are not sure if you have left assets behind, you can check with your former employer/s and financial institutions to verify. Submit your inquiry in writing, and include as much relevant detail as possible, such as the dates you started and finished your tenure with the employer, your address while you were with the organization and your current address, as well as any identification number that was assigned to you by the organization.

For defined-benefit pension assets, check with the PBGC to determine if they are holding pension assets for you. You can even check on behalf of a friend or a relative. (To help individuals find lost pension benefits, particularly with employers whose identity have changed due to mergers, acquisitions and the like, the PBGC published the booklet Finding A Lost Pension in English and Spanish, Buscar la Pensiòn Perdida-en Español.)

For IRAs, if your financial institution is unable to locate your assets, check with the state escheator to see if your assets have been escheated to the state. States usually publish a list of names of individuals whose property has been escheated. The list is published in a report titled Notice of Names of Persons Appearing to be Owners of Abandoned Property. This notice is published by county. If you are looking for escheated assets, look for the notice in the county where the financial institution that last had record of your address was located. Many states also make the information available on their websites, making it easier and faster for you to search for your assets.

Conclusion

Proper maintenance of documents is an integral part of effectively managing your financial affairs. Proper maintenance means keeping up-to-date records of your assets, accounts and financial institution with which the accounts are held. Also, as we indicated earlier, your records are meaningless for your heirs unless you ensure that they will be notified when necessary. If you engage the services of a financial and/or estate planner, know who to contact should it become necessary, and ensure your heirs know this as well. These are just a few of the steps you need to take to be sure your hard-earned assets are used in accordance with your wishes.

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