A “lost pension plan” refers to a retirement savings plan that an individual has contributed to in the past but has lost track of or forgotten about. These pension plans typically fall into two main categories: defined benefit pension plans and defined contribution retirement plans. Here’s how to understand and find a lost pension plan:
Defined Benefit Pension Plans:
How It Works: In a defined benefit pension plan, an employer promises to pay a specific monthly benefit to retirees based on factors such as years of service, salary history, and a predetermined formula. Employees often contribute a portion of their income to the plan during their working years. Upon retirement, they receive regular pension payments for life.
Finding a Lost Defined Benefit Pension Plan:
- Contact Former Employers: Start by reaching out to your former employers or their human resources departments. They should have records of your participation in the plan.
- Check Plan Documents: Review any old employment contracts, benefit statements, or retirement plan documents you may have kept, as they can contain information about the pension plan.
- Use Government Resources: In some countries, government agencies may assist in locating lost pension plans. For example, in the United States, the Pension Benefit Guaranty Corporation (PBGC) offers a search tool to find unclaimed pensions.
Defined Contribution Retirement Plans (e.g., 401(k), 403(b)):
How It Works: In a defined contribution retirement plan, such as a 401(k) or 403(b), employees contribute a portion of their salary into an individual account. Employers may also make contributions or matches. These contributions are typically invested in a selection of investment options chosen by the employee. Over time, the contributions grow through investment returns.
Finding a Lost Defined Contribution Retirement Plan:
- Contact Former Employers: Reach out to your former employers or their HR departments. They can provide information about your account or direct you to the plan administrator.
- Check Account Statements: Review old account statements, annual summaries, or retirement plan documents to find the name of the plan provider or administrator.
- Use Online Databases: Some online databases and services help individuals locate lost retirement accounts. In the United States, the National Registry of Unclaimed Retirement Benefits (NRURB) is a resource to consider.
- Consult with a Financial Advisor: Matthew Jennings, JD, MBA, EA, RFC®, CEP®, CES™, aka Tax King Matt can help you navigate the process of locating and claiming lost pension plans.
Tips for Finding Lost Pension Plans:
- Gather Information: Before contacting employers or plan administrators, gather as much information as possible about your past employment, including names of companies, dates of employment, and any plan documents you may have.
- Be Persistent: Finding a lost pension plan may require some effort and persistence. Follow up with employers and administrators if necessary.
- Maintain Records: Going forward, keep meticulous records of all retirement plans and accounts to prevent future loss.
- Review Tax Returns: Tax returns may provide information about retirement plan contributions and account balances, which can help you identify the plan and administrator.
- Check with Government Agencies: Depending on your location, government agencies may offer assistance or resources for finding lost pensions.
It’s crucial to take proactive steps to locate and claim any lost pension plans because they can be a valuable source of retirement income. Addressing lost pension plans can help ensure that you receive the retirement benefits you’ve earned through your years of work and savings.