How to Find a 401(k) From an Old Job— and Boost It!

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2:18I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

2:33It's 10 o 'clock. Do you know where your 401k is? Specifically your old 401k from a job you left. If you're a 90s kid or an 80s kid, you will get that joke and you will think I'm absolutely hilarious. And I think I'm hilarious. But to be real, I get it. Life happens. You leave a job. You're focused on your next move. And sometimes the last thing on your mind is finding an account that you can't even touch for a few decades. But those old 401ks are your money. And if you don't find them, manage them, or move them where they can grow smarter and harder for you. You are leaving cash on the table, and I do not want that for you.

3:06So today, I'm going to walk you through exactly how to track down a lost 401k, roll it over into a brokerage account or a Roth IRA with all the details step-by-step so you don't make expensive mistakes, especially when it comes to taxes. Plus, I'll even tell you how you can get an extra 1 % on that account. Step one, find your old 401k. First things first, you need to find where that sucker is. If you think you had a 401k at a previous job, but you aren't totally sure or you can't remember which provider it was with, here's how to track it down. If the company is still in business, reach out to their HR or payroll departments.

3:41You'll want to ask, did I participate in a 401k? If the answer is no, well, that's the end of this entire conversation. But if it's yes, ask who the plan administrator was and what's the contact information for that provider. You might need to provide some basic information like your social security number and the dates that you were employed. So definitely have that info ready. Or if you still have an old pay stub or an email from when you signed up for your 401k, check for the name of the plan provider. It's usually a company like Fidelity or Vanguard, but there are some others as well. Once you know the name of the provider, you can call them directly and give them your personal information to locate your account.

4:18If your old employer went out of business altogether, don't panic. Head to the National Registry of Unclaimed Retirement Benefits. Yes, there is such a thing, which is at www.unclaimedretirementbenefits.com. It's a free service that lets you search using your social security number, and I'll link all of these resources in the show notes. If that doesn't work, you can also check the Department of Labor. The DOL keeps a list of retirement plans that have been abandoned or are in the process of being terminated. You can find that list in the show notes as well. And just FYI, if you had less than$5 ,000 in the plan when you left your job, some employers may have automatically cashed out your 401k or moved it to an IRA on your behalf.

5:01So if you got a surprise check in the mail or a random statement from a provider that you don't remember signing up for, it might have been this. Once you've found the money, yay, now you have to put that money to work for you. You have a few options here, but we're going to focus on the two really smart ones. Number one, rolling it into a traditional IRA or number two, converting it into a Roth IRA. Now, I'll tell you the difference between both of these accounts, but if you want a deeper dive, I have linked an episode in the show notes that I did all about this. Lots of links in this episode because I definitely want to make sure you have everything you need here.

5:36OK, let's start with number one, a traditional IRA. If you want to keep your money growing tax deferred or avoid paying any immediate taxes or penalties, this is a great option. Here's how to do it step by step. Step one, create a traditional IRA. If you don't already have one, open an IRA with a brokerage. It takes about 10 minutes max, and usually there's no minimum deposit required. Right now, Public is offering a 1 % match on 401k rollovers. You can get started today at public.com slash money rehab. More on that a little bit later on. But for now, step two, contact your old 401k provider to initiate a direct rollover.

6:13That's the magic phrase, direct rollover. You basically want them to transfer the funds directly to your IRA, not directly to you. Why, you ask? Well, if they cut a check directly to you instead of the brokerage directly, the IRS considers that a distribution. And you could get slapped with a whole lot of stuff that you're not going to like, like a 20 % mandatory withholding for taxes, a 10 % early withdrawal penalty if you're under 59 and a half. Anyway, it's a big headache. So direct rollover is the magic phrase here. Step three, provide your IRA info. The 401k provider, this is where your 401k is currently being held, will need a few things like the name of your brokerage, public for example, your IRA account number, and the mailing address or routing number if it's an electronic transfer.

6:58Step four, watch for the transfer. The process usually takes anywhere from 5 to 20 business days. You might get a confirmation letter or you just might see the funds pop up in your IRA. Step five, and this is one that some people forget, invest the funds. Just because you put your money into a traditional IRA does not mean it will automatically be invested. It might just be sitting there doing absolutely nothing. So please pick the investments that you want. And voila. Five steps. Not super bad. OK, I'm going to tell you about your other option now, converting to a Roth IRA. A Roth IRA lets your money grow tax-free and then comes out tax-free in retirement.

7:40But here's the catch. because your 401k was funded with pre-tax dollars, rolling it over into a Roth IRA means you're converting it into post-tax money. So you're going to owe income tax on the entire amount you roll over. And again, if you're getting tripped up on the difference between a traditional and a Roth IRA, check out the episode that I've linked in the show notes. But if you're still with me, here's an example to think about. Let's say your old 401k has 20 grand in it. If you convert it to a Roth IRA, that 20 grand gets added to your taxable income for the year. That could push you potentially into a higher tax bracket and come tax season, you might be looking at a big bill.

8:18If you're wondering if you should do it anyway, here are three questions you should ask. Can I afford the tax hit this year? Am I in a relatively low tax bracket right now? And do I expect to be in a higher tax bracket later in life? If the answer is yes to all three of these, a Roth conversion might be the move for you. But again, please do your own research or get a second opinion from your financial advisor. If you do decide that this is the best move for you, here are the steps. Step one, open the Roth IRA. Same process as before, open an account at a brokerage like public. And just like with the traditional IRA, if you roll over your 401k to public, you get an uncapped 1 % match.

9:01So get that extra money. Step two, initiate a Roth conversion rollover. Call your 401k provider and tell them that you want to do a direct rollover to a Roth IRA. Again, direct is key here. Step three, raise for the tax bill. Before you do anything, talk to a CPA or a tax pro. You need to calculate how much extra tax you'll owe, whether you need to make estimated payments, and how it affects your overall tax strategy. Step four, pay taxes from another account. Ideally, you want to pay taxes from a separate account, not the 401k money itself. That way you're converting the full amount and keeping the power of compounding on your side.

9:38All right, let's talk about what not to do here. Don't take the money yourself. Even if you're planning to redeposit it, the clock starts ticking. You have 60 days to do a rollover or you'll owe taxes and penalties. And I hate those. And I'm sure you do, too. Don't do multiple rollovers in a year. You're only allowed to do one IRA to IRA rollover every 12 months, but direct rollovers from a 401k don't count toward that limit. Other than that, it is pretty straightforward. Our EP Morgan actually has gone through this process once. Here she is with her experience. So the first company I worked at after college had a 401k offering, and I worked at that company for five years and really rarely checked that account while I was there.

10:23And then about a year after I left, I decided that I should probably take control of that account and figure out what was going on there. It hadn't been that long, so I remembered that it had been with Fidelity, which isn't the brokerage I used at the time, so I did a rollover into a traditional IRA. I was worried that I was going to mess something up, but it actually wasn't as hard as I thought. You really just take it one step at a time. And I was thrilled to find out that I had$65 ,000 in that account. This happened years ago before I learned about public, so I didn't get to take advantage of a 1 % match.

10:55But if I knew at the time, I totally would have because that 1 % would have meant an extra$650, which isn't bad for one day. Especially when I do the math and think that over the course of five years, I grew$65 ,000 in that account, which adds up to about$35 a day. So getting an extra$650 in one day would have been pretty awesome. Finding and rolling over your old 401k isn't just a box to check. It is a power move. It is basically you saying, hey, I am in charge of my money. I am not going to let it sit forgotten in an abyss of corporate America. Whether you're rolling it into a traditional IRA for simplicity or converting it to a Roth for tax-free growth, the point is do something with it because every dollar you reclaim and reinvest is a dollar closer to freedom.

11:45You've got this. Now go get that money. And to get that 1 % boost we talked about, head over to public.com slash money rehab. And if you like this episode, do me a favor and share it with a friend who has a few old jobs on their resume. Let's not let our money go MIA. Paid for by public investing, full disclosures in podcast description.