Lost 401Ks and Pension Accounts - In Estate Planning Everything Needs a Home
By Melinda Gustafson Gervasi
July 13, 2021
Pop culture routinely tells us that the human mind is meant to be creative, solving problems, and dreaming up new ideas. The brain, they claim, is not meant to hold a laundry list of to-do items or an inventory of our assets. Attempts to go against the grain inevitably leave us standing in the produce aisle of a grocery store scratching our heads about what items we need to buy in order to fix dinner.
The same pit-fall captures quite a few of us when it comes to our retirement dollars. According to CNBC from 2004 to 2013 more than 16 million 401K and pension accounts, with a balance of $5,000 or less, were left with a former employer. In total, $8.5 billion was lost and not usable by retirees. As a result, there is a current legislative proposal aimed to help connect individuals with lost accounts through a national “lost and found” database. Read more of CNBC's reporting and the proposed legislation here.
One day there might be a national database to track lost accounts. However, right now there is not. Yet many of us have old retirement accounts scattered across the array of employers and careers we amass over decades of work. If you prefer to take action now rather than pin your hopes on a "one day" government program to help, I recommend finding a home for all of your financial information. Start with a labeled spot.
Why label a place for things? Well, quite simply it works. Earlier this summer my husband and I celebrated a wedding anniversary. He splurged (well, a splurge by our standards) and bought a store card. I on the other hand went for a gift. I placed labels in different parts of our home to give him a guide to wear items "belong". He had always said he wished our home were more like his engineering lab. So I went with it, and it worked. All it took was a label for "razor & shave cream" and "tooth brushes" for him to actually put them away after using them in the morning. One label, and boom, I no longer found myself picking up his items.
Perhaps this gives you a good laugh or a shake of your head at our odd ways, but pause on the idea for a moment. Do you have a labeled home for your retirement account documents? If a trusted member of your family or friend network walked into your home after you had a sudden illness or death, would they be able to easily identify assets that will be of great importance?
Being organized with your important papers is a huge gift to your loved ones. While it may not eliminate the work of handling your final affairs, a bit of organization on your part can go a long ways towards easing the burden on your loved ones. So, buy yourself some mailing labels and get to work! Organize your file cabinet or start a 3-ring binder to hold important paperwork and documents. Start with the big picture: sort them into illness, death, and taxes. Those three concepts are at the core of estate planning and can jumpstart your organization efforts.
Thank you for reading. Tune in during the months ahead as I delver deeper into the topic of having an organized and well-maintained estate plan.
 |
| The author, Melinda Gustafson Gervasi, with her equally frugal spouse, Charles. |
Remember, a blog is not meant to convey legal advice. Instead, it sparks thought and conversation. Always seek legal advice from an attorney in your state of residence for counsel on your specific situation.
