Recovering Pension and Savings Plan Benefits

With the exception of those fortunate individuals who have enjoyed lifetime employment with a single employer, most age-50+ workers and retirees have to keep track of pension and retirement savings benefits from several organizations stretching over 25-, 35-, and 45-year spans.

It's an understatement, but maintaining a lifetime's worth of investment data can be challenging.

Personal records get lost. Home addresses change. Retirement income plans are revised or cancelled. Companies merge, change names, and go out of business.

All the workings of the marketplace can add up to “lost assets,” pension or savings-plan capital and benefits that are lost in the simple passing of time.

In the midst of our busy careers, we often don't think of maintaining accurate records of where our accumulated pensions or savings-plan benefits are. But if a previous employer or plan administrator cannot locate you, your retirement benefits and assets are generally set securely aside until you go looking for them. If your former employer or plan administrator goes out of business, your assets are transferred to a successor entity, and the paper trail gets colder.

Since several businesses faltered in the past year's rough economy, I have received an increasing number of questions about locating and recovering lost assets and benefits. See if one of the following scenarios applies to questions you may have.

I’ve worked in coal mining for my entire life. About 15 years ago, I got a letter informing me that I could begin receiving pension payments as early as age 55. I’m now 60 and would like to begin those benefits, but I can’t find the original plan information. I can’t find any phone numbers or addresses to reach someone. How do I go about locating my lost pension? –Michael, Utah

A: If you’re lucky, the employer will still be in business, and your biggest challenge will be finding out how to reach the HR department. The easiest way to do this is to contact a previous coworker, who may be receiving payments, or to get on the Internet and start searching by the employer’s name. Once you’ve found the information and verified your employment, the employer will activate your payments or transfer account balances to you.

Unfortunately, tracking down your pension is not always that simple.  

Most pension and employer-funded savings plans have length-of-service and vesting requirements. If your length of service didn’t meet plan requirements, you are not likely to be eligible for any benefits. If your employment was before 1976, service and vesting requirements were typically longer. Did you earn enough money and have enough service to yield a meaningful benefit? Sometimes the only way you’ll know is to complete all the research. Still, if you find a pension paying $100 or $200 each month or a savings plan with a $5,000 balance, reaping the income is worth the effort. After all, you earned these benefits.

Gather information about the employer and the retirement-income plan. Notification letters, benefit statements, or summary-plan descriptions are the best. If you can’t locate these, find your tax returns for the years in question. The W-2 attached to your return contains the critical information you’ll need: the nine-digit Federal Employer Identification Number (EIN). If you can’t find your old returns, you can request copies from the Internal Revenue Service. Ideally, you want to find the three-digit IRS Plan Number that will appear on plan summaries or statements. This number will be valuable later in the process.Alternatively, you can obtain a copy of your Social Security earnings at www.socialsecurity.gov/online/forms.html.

If your employer has ceased to exist and you had a balance in your retirement income plan, the funds and records might have passed to a successor organization or been placed in a financial institution administering the plan's assets and benefits.

At worst, your employer defaulted on the obligation and there are no assets. This is far less likely to have happened after the 1976 Employee Retirement Income Security Act (ERISA), which required employers to provide increased security for retirement-plan participants.

If your past employer filed bankruptcy and there was no successor organization, your assets and records would pass to the Pension Benefit Guaranty Corporation (PBGC). This federal agency takes over the assets and payment obligations for bankrupt plan sponsors. The agency's Web site, www.pbgc.gov offers extensive information, including the publication, “Finding a Lost Pension”. You can also phone the PBGC’s "Missing Participant Program" toll-free, at 1-800-326-5678. It’s likely, though, that once transferred to PBGC care, your pension will not pay full benefits.

The PBGC maintains online databases of plans and plan participants. Your may find your name on the PBGC database, and your search will be over.

If there is no record with the PBGC, you can contact the National Registry of Unclaimed Retirement Benefits. This organization maintains a database of people whose previous employers have established Individual Retirement Accounts (IRAs) for former employees.

One word of caution: Be very wary of organizations claiming to help in recovering lost assets "for a fee" or for a share of the found money. There are legitimate organizations and professionals engaged in this activity. Do not pay any fees in advance, and deal only with organizations you can reference-check and verify.

Q: I was laid off recently from an employer that provided a 401(k) Qualified Savings Plan. I still have a balance in the plan and want to roll it over into my own personal IRA. When I contacted the financial institution managing the plan, they said I needed to obtain "rollover" forms from the employer. My calls aren't getting returned. Can I get the reforms elsewhere? Eli, Georgia

A: The money in your 401(k) is protected under the rules of the Employee Retirement Income Security Act. Your employer is obligated to cooperate in permitting you to transfer or roll over the assets in your 401(k) into your own personal IRA or into the 401(k) plan of a new employer, if the new employer permits this.

Some 401(k) plans don't require rollover forms from your prior employer. You can have your new employer or IRA manager "pull" the assets into your new plan. In other plans, you must have rollover documents from the previous employer, who then arranges to "push" or "release" the assets into your new plan in cooperation with the new plan managers.

This is normally a routine process, and an employer would have little interest in impeding the transfer to your new plan. It's not unheard of, though, to have your previous employer's plan administrator or fund manager delay the transfer. After all, a transfer would mean management fees out of the employer's pocket. The employer would be well advised not to do this for any extended period of time, but it is up to you to ensure that the transfer takes place once all of the required forms are processed.

So, what steps should you take?

1.    Collect information including your Employer's Tax-ID Number and 3-digit IRS Plan ID Number. Confirm the mailing address and contact information of your prior employer. Have your most recent balance statement from the plan. Refer to the Summary Plan Description (SPD) for your plan, or contact the plan administrator, for information regarding rules for rollover processing. Also, find out who the "Plan Trustees" are for your 401(k).

2.    Try calling your previous employer again. See if you can't get the forms. If your call doesn't produce immediate results, contact the Plan Trustees (unless they are the owner) and state your demand.

3.    If calling the owner or Trustee doesn't produce results, it's time to get tough. Send the owner a certified or registered letter demanding the necessary forms. Copy the financial institution managing the plan. Set a deadline, and tell your prior employer you will file complaints with the Department of Labor and the IRS if the company doesn't comply. It's very likely your written demand will bring results.

4.     If the balance in your 401(k) warrants the expense, contact a lawyer specializing in employment and employee-benefit law. The lawyer may simply direct you on how to initiate a formal complaint through the U.S. Department of Labor and the IRS. It may also be sufficient that your attorney contact the employer and plan manager. Whatever you do, don't let any more time pass. Every day increases the likelihood of not recovering your money.