Show us the money!
There are 29.2 million left-behind or forgotten 401(k) accounts holding approximately $1.65 trillion in assets. The workers and families who own these funds often have no idea of their existence because they have changed jobs or their former employer has gone out of business.
While state unclaimed property programs already work to reunite individuals with financial assets — such as the contents of a safe deposit back or utility reimbursements — regulatory ambiguity allows thousands of accounts to go unclaimed. The letter urges the DOL to develop a uniform, nationwide regulation that allows state unclaimed property programs to help reunite individuals with their lost retirement checks.
“Retirement benefits belong to the Americans who worked hard to earn them, not the large financial institutions who service them,” said Representative Seth Magaziner (D-RI-02). “As the former state treasurer of Rhode Island, I know that Rhode Island’s unclaimed property division works tirelessly to reunite individuals with their missing property and can do the same for missing retirement checks. Everyone deserves to retire with dignity and financial security.”
“As the Kansas State Treasurer who helped reconnect Kansans with hundreds of thousands of dollars in unclaimed property during my tenure, I am urging the Department of Labor to likewise work with states to help reconnect Americans with unclaimed retirement savings. Congressman Magaziner and I both know the difference it can make for constituents to receive money that's rightfully theirs, and having the Department of Labor work with state treasurers will help reunite retirees with their hard-earned benefits,” said Congressman Ron Estes (R-KS-04).
“We applaud the leadership of House members on this bipartisan issue. Billions of dollars of hard-earned retirement funds remain disconnected from their rightful owners. State unclaimed property programs have a proven track record of returning many types of property and stand ready to do the same with retirement funds,” said Michael Frerichs, Illinois State Treasurer & President of the National Association of State Treasurers.
While the Employee Retirement Income Security Act (ERISA) preempts state unclaimed property laws, the DOL can develop a regulatory safe harbor that will expand the ability of retirement plan administrators to voluntarily transfer uncashed retirement plan checks to state unclaimed property programs, in accordance with their ERISA fiduciary obligations.
The bipartisan letter was signed by 37 Members of Congress: U.S. Representatives Seth Magaziner (D-RI-02); Ron Estes (R-KS-04); Becca Balint (D-VT-AL); Lisa Blunt Rochester (D-DE-AL); Nikki Budzinski (D-IL-13); Yadira Caraveo (D-CO-08); Matt Cartwright (D-PA-08); Sean Casten (D-IL-06); Jason Crow (D-CO-06); John Curtis (R-UT-03); Christopher Deluzio (D-PA-17); Adriano Espaillat (D-NY-13); Brian Fitzpatrick (R-PA-1); Bill Foster (D-IL-11); Russell Fry (R-SC-07); Daniel Goldman (D-NY-10); Josh Gottheimer (D-NJ-05); J. Hill (R-AR-02); James Himes (D-CT-4); Steny Hoyer (D-MD-5); Val Hoyle (D-OR-4); Glenn Ivey (D-MD-04); Raja Krishnamoorthi (D-IL-08); Summer Lee (D-PA-12); Susie Lee (D-NV-03); Ted Lieu (D-CA-36); Daniel Meuser (R-PA-09); Ralph Norman (R-SC-4); Brittany Pettersen (D-CO-07); Chellie Pingree (D-ME-01); Mike Quigley (D-IL-05); Delia Ramirez (D-IL-03); John Rose (R-TN-06); John Sarbanes (D-MD-03); Bradley Schneider (D-IL-10); Pete Stauber (D-MN-08); Thomas Suozzi (D-NY-03); Glenn Thompson (R-PA-13); William Timmons (R-SC-04).
Full text of the letter is below. A PDF copy of the letter
is available here.
The Honorable Julie A. Su
Acting Secretary of Labor
U.S. Department of Labor
Dear Acting Secretary Su:
Millions of Americans work hard to accrue retirement savings they never see because their employer-sponsored retirement accounts didn’t transfer after a job change or their former employer has gone out of business. Instead, hundreds of millions of dollars that belong to workers and their families are sitting in suspense accounts at large corporations that service retirement plans. Retirement plan checks should belong to the individuals who earned them, not financial institutions. As Representatives, we know states have the existing infrastructure and hold the public’s interest to reunite individuals with their unclaimed property. We urge the Department of Labor (DOL) to develop a uniform, nationwide regulation that allows state unclaimed property programs to serve as a vehicle for reuniting individuals with their uncashed distribution checks.
State unclaimed property programs have the technical expertise and a long history of reuniting rightful owners with their abandoned property. As early as the 1950s, states have enacted unclaimed property laws that required corporations, businesses, associations, financial institutions, and insurance companies to report and turn over unclaimed assets. Today, all 50 states, as well as the District of Columbia, Guam, Puerto Rico, and the Virgin Islands, have laws that designate state treasurers or other state administrators as the custodians of unclaimed property. Retirement plan checks shouldn’t be treated differently than the other financial assets states already work to successfully reunite with their owners, such as the contents of a safe deposit box, bank accounts, uncashed checks, matured or terminated insurance policies, royalty payments, and utility account deposits.
After the DOL asked the Employee Retirement Income Security Act (ERISA) Advisory Council to explore whether there are circumstances under which a defined benefit or defined contribution pension plan might consider voluntary transfers of uncashed distribution checks to a state unclaimed property program, the Advisory Council concluded that State unclaimed property funds “have a number of features that may decrease the risk of the funds being depleted by account fees and increase the likelihood that missing participants will be reunited with their lost retirement savings.”
States have developed many powerful and effective methods for locating owners and are best positioned to do so. For example, most states participate in the national database of unclaimed property (MissingMoney.com) that allows the public to search most states at once at no cost, they cross-check public databases to proactively locate owners and return unclaimed property to them, conduct thousands of public outreach events, do not charge fees to claim the found property, and will honor claims in perpetuity. In contrast to financial institutions or rollover IRA custodians, there are no issues of account fees potentially outpacing returns. According to the National Association of Unclaimed Property Administrators, state unclaimed property programs returned a record-breaking $5 billion to owners in 2023.
Additionally, the States' Unclaimed Retirement Clearing House (SURCH) initiative that the National Association of State Treasurers has proposed offers a streamlined, no-cost solution for private sector retirement plan administrators to voluntarily transfer uncashed distribution checks to state programs. This centralized reporting entity eliminates the administrative burden on retirement plans and ensures seamless compliance with state requirements. To date, 47 states have signed on to join SURCH. As such, we encourage the Department to finalize a rule establishing a safe harbor for the voluntary transfer of uncashed distribution checks from both active and abandoned or terminated plans to state unclaimed property programs.
By allowing state unclaimed property programs with a proven track record to reunite individuals with their uncashed distribution checks, we can significantly increase the likelihood of reuniting missing participants with their retirement savings.
Thank you for the opportunity to comment on this important
matter.
