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The RetireMentors

Retirement advice from experts in the business

July 10, 2015, 11:02 a.m. EDT

Do you feel lucky, 401(k) saver? Well, do you?

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By Spencer Williams

About Spencer

J. Spencer Williams is president and CEO of Retirement Clearinghouse where he applies more than 25 years of experience in starting, building and leading businesses in the financial services industry. Under his leadership, Retirement Clearinghouse introduced new industry best practices, been recognized for innovation and improved the operations of thousands of retirement plans. Follow Spencer on Linkedin and read his company blog.

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Go ahead, make his day.

During a high-stakes standoff in the 1971 film Dirty Harry , Clint Eastwood's eponymous character memorably advises his opponent to ask himself, "Do I feel lucky?"

Forty-four years later, retirement plan participants who have left savings accounts behind when changing jobs should ask themselves the same question. If their addresses are not up-to-date in the records of their former employers' plans, then these participants will need plenty of luck to track down and preserve their hard-earned assets.

The Economic Growth and Tax Relief Reconciliation Act of 2001 give employers the option to unilaterally roll former employees' retirement savings accounts out of their plans — if those accounts have balances of less than $5,000. If you left behind a 401(k) account with less than $5,000 when parting ways with a previous employer, and later moved without giving the ex-employer's retirement plan record-keeper your new address, you might want to consider getting out ahead of Dirty Harry's question.

You're out of luck if:

  • Your former employer mails you a notice that your 401(k) balance will be rolled over to a safe harbor IRA, but the notice is sent to an out-of-date address.

  • You leave behind a 401(k) balance with under $1,000. In that case, your former employer may decide to cash out your account and send you a check rather than rolling your assets over to a safe harbor IRA — but if the check is sent to an out-of-date address, the only recourse is taking Dirty Harry's famous advice.

  • Your stranded account has over $5,000 on your last day of work at an employer, and the stock market experiences a 10% decline after you leave, causing your balance to dip below $5,000. Cue a replay of the first scenario above.

  • Your former employer changes the plan's investment options, switches record-keepers, or is merged with/acquired by another company, which would leave you in the dark regarding the status of your account. The ex-employer would have to inform you of such developments, but once again, if the notice is mailed to the wrong address, you're out of luck.

One in six Americans will relocate in any given year, according to U.S. Census Bureau data, and the Employee Benefit Research Institute estimates that the average employee will change jobs at least seven times over the course of a 40-year career. American workers put their retirement savings at risk if they neglect to keep their addresses up-to-date with former employers' retirement plan record-keepers — and these statistics demonstrate the potential magnitude of the problem.

To prevent your previous 401(k) balances from disappearing, call the human resources departments at your former employers and make sure their plan record-keepers have your current address on file.

However, to take full ownership of your retirement savings — and avoid having to make these calls every time you move — you should consider consolidating all of your 401(k) balances into your current employer's plan. Consult your present employer's human resources department to get started.

In 1983's Sudden Impact , the third sequel to Dirty Harry , Clint Eastwood's character remarks, "Go ahead, make my day." Instead of asking yourself if you feel lucky with regard to the fate of your past 401(k) balances, make my day (and your own) by taking one of the proactive approaches outlined in this column — preferably sooner rather than later.

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