Sen. Elizabeth Warren, D-Mass., introduced a bill Tuesday that would create a national online list of retirement accounts that have been left at an account holder’s former employer.
The Retirement Savings Lost and Found Act, introduced by Warren and Sen. Steve Daines, R-Mont., uses the data employers are already required to report to create the “lost and found” database. With the click of a button, any worker could locate all of their former employer-sponsored retirement accounts, the senators state.
The bill also allows employers to more easily invest abandoned accounts into target-date funds rather than money-market funds.
The senators cited research by the Government Accountability Office finding that $1,000 in a target-date account was projected to grow to $2,700 over 30 years while $1,000 in a money-market account was reduced to $0.
“Orphaned” funds with balances less than $1,000 can also be transferred to Treasury securities, such as those found in the myRA, so that balances earn a positive return.
“When an employee leaves a job, it’s often hard for them to keep track of their retirement accounts during these transitional times,” Daines said in a statement. “This is a common-sense approach that will empower individuals to take control of their retirement future.”
Warren added that “our country faces a retirement crisis, and it’s important that all workers have a real chance to build retirement security. But today, millions of Americans are losing critical savings when they move between jobs.”
— Check out Advisors Targeting ‘Orphan’ 401(k)s Can Reap Big Rollover Rewards on ThinkAdvisor.