How do I find my lost IRA?

Back in my 20s, I opened an IRA. I remember doing it because it was my first exposure to index funds. And I know this sounds crazy, but—after a career change and a couple of moves—I lost track of the account entirely. Now I’m 45. The other day I was checking my 401(k) balance when it hit me: What happened to that IRA? I’d love to have it back, but I don’t know where to start. Help!

—Vanessa S., Roanoke, W.Va.

Individual Retirement Accounts (IRAs), tax-favored accounts that are particularly important if you don’t have access to a work-sponsored 401(k), can be a bit of a paradox. When you set one up during your early working years, you do so expecting your investments (e.g., index funds) to grow on autopilot for decades; it falls into the category of “set it and forget it.” But truly forgetting about an IRA can cost you. Here’s what happens to lost IRAs, and what you need to do to find them.

Follow the money

Every IRA has a financial institution, known as a custodian, attached to it. (These custodians are usually a mutual fund company or robo-advisor, but bank or life insurance companies also offer IRAs.) Under normal circumstances, your custodian, such as Vanguard or Fidelity, will hold onto your IRA until you’re ready to cash out in retirement—even if you don’t make anything more than an initial contribution. The catch: Custodians require your up-to-date contact information—address, phone, email—to send you tax statements and other correspondence. It’s the law. And it’s on you to keep in touch.

If you’ve just recently forgotten where you opened your IRA—say, five years ago or less—search through password management apps, emails, tax returns, and any hard-copy files for clues. If you’re able to track down the custodian, call and be ready to provide your Social Security number and perhaps fill out a form or two to verify that you’re the owner. If you come up empty, attempt trial and error: Call major brokerages like those mentioned above (odds are you used one of them) and ask if there is an account under your name. Again, be prepared to prove you’re the person who opened it.

Return to sender

If it’s been five years or more and you’ve fallen out of touch completely—meaning that statements sent to old addresses (postal or email) got returned, and calls to outdated phone numbers went unanswered—that can mean trouble. After three to five years of no contact (depending on the state where your account began), IRA custodians are required by law to give up on you. Your IRA is declared abandoned and unclaimed. Guess who takes over your lost IRA funds? The treasurer of the state where you opened your account.

This process is called escheatment, a term I didn’t know until working on this piece. Once your custodian transfers your IRA to the state, it’s taken out of the investment it was in and stops earning interest. (So if that lost IRA was invested in, say, an index fund earning an average of 7% interest, it now gets transferred into an account earning zilch.) On top of that, there may also be a 10% early withdrawal tax penalty assessed automatically. The moral here is something your mother may have told you: It wouldn’t kill you to keep in touch. (Although in this case, it does seem a bit draconian to punish a forward-thinking saver for such youthful neglect.)

The end of the rainbow

There is thankfully some light at the end of this dark financial tunnel—the fact that you can likely reclaim your money from the state coffers. Try following these steps:

• Visit missingmoney.com, the unclaimed property site endorsed by 40 states. There, you can do a free cross-country search for any missing funds. Just type in your name.
• Even if you’re not looking for a particular account, you might be surprised by what you find, like a $100 credit from a storage unit company you used years ago. You’ll be taken to the appropriate state’s site to make an official claim on the money and upload any verification documents that are needed for the claim process.
• There are also links to sites for the 10 states whose data isn’t contained in the missingmoney.com database, including California and Pennsylvania.

You snooze, you lose

Okay, but how do you keep yourself out of this situation? The easy answer: Even if you’re not making any new transactions in your IRA, it’s a smart practice to log in and confirm your account details (including the important ways of contacting you, like your address and phone number) every year. You might as well know what the balance is, right?

Here are a couple more tips:

• Keep old 401(k)s. You probably know not to cash out your 401(k) when you leave a job. (As a reminder: You’ll pay penalties if you do so, and you may have to pay taxes too.) And though conventional wisdom says you should roll that money into your new company’s 401(k) or an IRA, you may not actually have to do that. If you really like your old company’s 401(k) investments (maybe they have great low-cost index funds), you can keep the money with that company, even after you bid your job adieu. The reason: 401(k)s are held to stricter legal standards than IRAs. Escheatment laws generally don’t apply to them, and your old employer is required to search for you relentlessly in the case of unclaimed funds.
• Keep it simple: Send necessary 401(k) rollovers to just one IRA. If your 401(k) account balance is below $5,000, your former employer may require you to take it with you, in which case you’ll need to do a rollover. If you don’t have a 401(k) at your new job, or you don’t like the investments in the new 401(k), you’ll need to roll the money into an IRA. Since you will likely move jobs again (and again) during your working years, try to keep all rollovers in one designated IRA account, if possible. That way, you won’t need to spend your retirement years trying to track down several different accounts.

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