The nearly 45 percent of U.S. employees who leave behind their retirement accounts when they move to a new job are creating a multibillion-dollar headache for employers who have to manage these accounts.
According to one of the more reliable estimates, from Charles Schwab, 43 percent of assets held by 401(k) participants who left their jobs in the first quarter of 2008 had not been moved a year later. (The rest of those holdings either were rolled over into IRAs, taken as cash distributions or moved into new employer plans.)
Finding missing participants
So what happens if you have a lot of missing participants in your plan with more than $5,000 in assets?
Uncashed checks and monetary limbo
A big problem that gets rarely discussed is what plan sponsors can do about uncashed distribution checks. Companies across the country regularly send distribution checks to former plan participants. But if these former employees don’t cash the checks, that money remains in the employer’s retirement plan.