By Emily Gilbert
Here at PRC, we often hear from people who worked for a company that has since moved, been bought, or gone out of business, and they cannot find their retirement plan. The good news is that Congress seems to be getting closer to addressing this issue. In May of 2021, Senators Elizabeth Warren (D-MA) and Steve Daines (R-MT) re-introduced the Retirement Savings Lost and Found Act (S.1730).
In his recent column, The Savings Game: Congress can make it easier to find lost retirement funds, Elliot Raphaelson explains some of the key provisions of the bill. First, it would establish an online pension registry inside a new Office of Lost and Found housed in the Pension Benefit Guaranty Corporation (PBGC). If a retirement plan changed its name or address or was sold, they would be required to forward this information to the database. This would help individuals search for pension and 401(k) plans that are “lost” when their former companies move or change corporate structures.
Addressing this issue has long been a priority of the Pension Rights Center. As Karen Ferguson, PRC President, says in the column, “this will help retirees locate the pension and other retirement benefits they earned but cannot find because their former employers changed their names, addresses or structure. Currently, thousands of individuals contact pension counseling projects and government agencies each year seeking help in finding their lost pensions. This important bill will close a critical and too-long-overlooked gap in our nation’s private retirement system.”
The bill also addresses the issue of “forced transfers,” where plan administrators may transfer small accounts of former employees out of the retirement plan, if such a transfer is permitted by the plan rules. The Retirement Savings Lost and Found Act would require plans which force out small accounts of $1,000 or less to send the account balance to the Office of Retirement Saving Lost and Found if they cannot locate the participant. Then, individuals would be able to go to the database to find their lost money. As Raphaelson explains, “the bill requires reporting to the PBGC for unclaimed forced-out accounts in excess of $1,000, but less than $6,000 that are transferred to an IRA. Individuals with small forced-out accounts will be able to search the database to find contact information for the financial institution holding their IRA. The bill raises the force-out limit from $5,000 to $6,000.”
These lost plan provisions have also been included in the Securing a Strong Retirement Act of 2021 (H.R.2954), which was passed unanimously out of the Ways & Means Committee in the House of Representatives on May 5, 2021, and in the Retirement Security and Savings Act (S.1770), introduced in the Senate on May 20, 2021.
We are hopeful that Congress will act to pass these provisions, as they will help many retirees across the country who are struggling to locate the retirement benefits they worked for and earned.