U.S. Representative Seth Magaziner (D-RI) is leading a bipartisan effort to reunite Americans with their lost retirement benefits, totaling approximately $1.65 trillion, sitting in 29.2 million forgotten 401(k) accounts.
In a letter to the Department of Labor (DOL), Magaziner, joined by 37 other members of Congress, urged the agency to create a uniform, nationwide regulation allowing state unclaimed property programs to help individuals reclaim these lost funds.
The issue arises when workers change jobs or their former employers cease operations, leaving them unaware of their retirement savings. While state unclaimed property programs successfully reunite individuals with other financial assets, regulatory ambiguity hinders their efforts with retirement checks.
“Retirement benefits belong to the Americans who worked hard to earn them, not the large financial institutions who service them,” said Magaziner, emphasizing the importance of reuniting individuals with their hard-earned savings.
The letter highlights the success of state unclaimed property programs, noting their existing infrastructure and track record in returning various types of property to their rightful owners. Michael Frerichs, Illinois State Treasurer and President of the National Association of State Treasurers, expressed support for the initiative, stating that state unclaimed property programs are ready to assist in reuniting retirees with their retirement funds.
The proposed regulation aims to address the Employee Retirement Income Security Act (ERISA) preemption of state unclaimed property laws by creating a safe harbor for retirement plan administrators. This would allow them to voluntarily transfer uncashed retirement checks to state programs, ensuring compliance with ERISA fiduciary obligations.
The letter concludes by urging the DOL to finalize a rule establishing this safe harbor for both active and abandoned or terminated plans, leveraging the expertise of state unclaimed property programs to reconnect Americans with their missing retirement savings.
Generative artificial intelligence (AI) assisted a What’sUpNewp journalist with the reporting included in this story.