Every year, owners and heirs fail to claim retirement funds. Traditional and Roth IRA's may be considered abandoned if distribution checks are uncashed after the owner reaches 59 1/2 years of age. The IRA may be considered unclaimed if a withdrawal is not made by age 70 1/2 and the non withdrawal triggers a 50% tax penalty. Due to tax free compounding over the years, many elderlies approaching 70 have average accounts of about $100,000. Because of the long term of retirement accounts, owners and heirs may not be aware of the money they may be entitled to.
Retirement Money is held in these Plans -
$17.9 trillion was held in retirement accounts. Of this, $4.4 trillion (26%) was held in mutual funds.
Direct benefit plans held $2.4 trillion of these assets.
Direct contribution plans held $4.5 trillion
IRAs held $4.9 trillion (27%). Of this, $2.2 trillion was held in mutual funds.
46 million households own at least one IRA. 31% of IRA-owning households own 2 IRAs, 15% own 3.
There are approximately 7,637 mutual funds, including 632 money market funds, which hold $13.4 trillion in assets.
90.4 million individuals own mutual funds. 94% of mutual fund owners are saving for retirement. of these, 65% own IRAs and 78% own employer-sponsored direct contribution plan accounts.
91% of households owning mutual fund shares own them in workplace retirement plans, IRAs, and other tax-advantaged accounts.
Mutual funds account for $4.4 trillion, or 26%, of the $17.9 trillion held in retirement accounts.
There are a variety of investment options for persons saving for retirement including:
Employer-sponsored retirement plans may be either:
A defined benefit (DB) plan, which provides a specified monthly benefit at retirement. As of last year, $2.4 trillion was held in DB plans; or
A defined contribution (DC) plan, which does not promise a specific benefit amount. Instead, the value of a participant's account depends on how much is contributed and how well the investments perform. Examples of these are 401(k), 403(b), and 457 plans. As of last year, $4.5 trillion was held in DC plans. Both DB and DC plans are covered by the Employee Retirement Income Securities Act (ERISA).
Compliance with ERISA is overseen by the U.S. Department of Labor (DOL). According to the DOL, ERISA preempts the escheatment of ERISA plans. (The same is not true of non-ERISA retirement plans, such as IRAs).
Traditional IRA (1974)
Income Limits: None
Contribution Limits: $5000-$6000
Taxation: Contributions may be tax- deductible; distributions are taxed.
Required Minimum Distributions: Imposed at age 70 1/2 based on an IRS worksheet and the account holder's life expectancy - range is from 27.4 years at age 70 to 1.9 years at age 115 or older!!!
Roth IRA (1997)
Income Limits: Imposed based on account holder's modified gross income ($10,000-$183,000)
Contribution Limits: same
Taxation: Contributions are taxed; distributions are not taxed provided " seasoning period" of five years has lapsed and distributions are for retirement or disability.
Required Minimum Distributions: None
Escheatment of Traditional IRAs
What is Escheat?
The remittance of abandoned/unclaimed properties to the state of an owner's last known address after the predefined dormancy/abandonment period has lapsed.
Holders of a traditional IRA must begin receiving their Required Minimum Distributions (RMD) at age 70 1/2.
What is a Holder?
Holders may include state and local governments, banks, clinics, businesses, retailers, insurance companies, oil and gas companies, hospitals and so forth. Holders must, after a predetermined period of inactivity, turn unclaimed property over to the state of the owner's last known address.
Many State laws treat the RMD year as the trigger date for escheatment for shareholders who have not taken an RMD.
It is up to a shareholder to determine which of its IRA accounts it will take its RMD from - a shareholder may total the RMD for each of its IRAs and take the total form a single IRA.
Finding Unclaimed Retirement Money
Many people change jobs and just leave their pensions under the care of their former employer. But, companies change too, with mergers, sales, acquisitions and bankruptcies, but that doesn't mean your money isn't retrievable.
To begin your search, contact the company you or the Decedent worked for. If they can't help you, contact the Pension Benefit Guaranty Corporation. You will need the Social Security Number, Pension Plan Name, PBGC case number and the Company or Plan Sponsor Name. The search may only include those people whom PBGC has not been able to contact. You can contact the PBGC if you are the beneficiary to ascertain if you are entitled to a benefit. You can also try to contact the Pension Plan Administrator. For more information on PBGC, Click Here.
The NRURB - National Registry of Unclaimed Retirement Benefits is another Free Service for former employees and heirs to contact. To Search, Click Here.
Transfer to Search
The Unclaimed Money Database is a Fast and Easy Way to See if you have Missing Money that is being held by the Government. You'll instantly search the National Unclaimed Property database. You can also be connected to every State's Unclaimed Property Agency so you can contact them by email or telephone to receive personal service in retrieving your money.
Remember the service is Free and there is a 30% chance that you'll find some Missing Money.