From the U.S. Government Accountability Office, www.gao.gov Transcript for: Workplace Retirement Accounts: Leaving Money on the Table Description: Billions of dollars from millions of retirement accounts are up in the air. What can be done to ensure Americans aren't missing out on retirement funds? Related GAO Work: GAO-18-19: Work Place Retirement Accounts: Better Guidance and Information Could Help Plan Participants at Home and Abroad Manage Their Retirement Savings Released: March 2018 [ Background Music ] [ Charlie Jeszeck: ] For a lot of people and, you know, they may never see this money. [ Matt Oldham: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability office. I'm Matt Oldham. For many Americans, a workplace retirement account, whether it's a pension or 401K or something like that, represents one of the best ways to be financially prepared for time spent in retirement. But, over the years, many workers have changed jobs and employers and many retirement plans are simply getting lost in the shuffle, never to be drawn from or cashed in. And if you think this must be a problem that isn't affecting many Americans or isn't costing them much money, you'd probably be surprised. Recently, I sat down with Charlie Jeszeck, a director in our Education, Workforce, and Income Security Team, to talk about GAO's new report on workplace retirement accounts. I wanted to know how big of an issue are unclaimed retirement accounts in the United States? [ Charlie Jeszeck: ] It's not well-known, but it actually is quite a significant issue. It's a big issue. Between 2004 and 2013, there were over 25 million workers who left an account behind when they switched jobs. If you look at by dollars in the accounts, while most of these are small accounts, it adds up. For example, there were 16 million accounts with $5000 or less, totaling about $8.5 billion. So, there's a lot of money here and a lot of accounts. [ Matt Oldham: ] You're saying this is-- employees were leaving accounts. Are they ever going to get reunited with these accounts again? [ Charlie Jeszeck: ] Well, in some cases, they may be reunited. The plan sponsor may be able to track them down or whoever the plan sponsor hires may track them down, but for a lot of people, you know, they may never see this money. And so, in particular, if it's $5000 or less, the employer has the option to put this money into so-called forced accounts, they're forcibly transferred into other accounts where the company is looking for you, but while they're looking for you, they're charging fees to that account. And, if they don't find you within a reasonable period of time, that $5000 can attrit down to almost nothing. [ Matt Oldham: ] Besides the attrition that you just-- the example you just gave, what happens to all the rest of the money if it remains unclaimed? [ Charlie Jeszeck: ] It's out there. It's in paper checks, it's in people's drawers, or it's just, you know, lost letters. It is taxed by IRS, but it's just simply not accessible to the people to who it belongs to. [ Matt Oldham: ] You bring up the IRS, which leads into my next question. Are there any federal agencies that are addressing this issue? [ Charlie Jeszeck: ] Well, there are several federal agencies that do address pieces of this, but no one really does it in a comprehensive way. So, for example, the Department of Labor provides guidance to plan sponsors on how to track down employees, but only to those plan sponsors of plans that have been terminated or ended. They no longer exist. IRS provides data to the Social Security Administration, but very often this data is not accurate, and it's not actually disseminated to the participants until they actually apply for social security benefits. So, individuals may not know about the fact that they have some money out there or benefits somewhere, you know, for many, many years. And, finally, PBGC recently-- which is also in the Department of Labor and they're the aid-- the Pension Benefit Guarantee Corporation. They have some authority now to-- if a plan sponsor comes to them to provide information on-- to help track down individuals. However, again, this is only in the context of terminated plans. [ Matt Oldham: ] And, in this report, there was another separate group of people that was addressed, and it was involving Americans working abroad. What was that part of the report? [ Charlie Jeszeck: ] Yeah, that report was-- we're looking into the challenges Americans who work overseas have in saving for retirement. And what we found is that many of these individuals, because of the fact they live in another country, there-- and there are these international tax treaties, but also because the guidance from IRS is not very clear. The law is very complex. Many of these workers, these participants, have a difficult time saving for retirement. [ Background Music ] [ Matt Oldham: ] So, what Charlie is saying, more than $1 billion may be at stake, either because retirement plan sponsors have lost track of employees or Americans living overseas may not know the tax implications of foreign retirement account activity. I asked Charlie to walk me through his team's recommendations. [ Charlie Jeszeck: ] Labor should provide better guidance to plan sponsors in all cases on how to track down former employees and not just in cases where there is a terminated plan. That IRS and SSA do more to update the data that they have on benefits that belong to people, so that when people get information from SSA, it's accurate and it's not that they were told they have a benefit, but in fact that benefit no longer exists. We also suggested that IRS reinstitute its forwarding service, letter forwarding service. We think that would go a long way. Regarding the foreign-- workers in foreign countries, one, we thought that the IRS should put out better guidance to help Americans in other countries navigate the tax the system, so it won't be as complex and expensive to file. Also, that Congress should take action to allow rollovers from one account to another for Americans working overseas. [ Matt Oldham: ] What do you believe is the bottom line of this report? [ Charlie Jeszeck: ] The bottom line is this is a big issue, both for workers domestically as well as overseas, but it's a fixable one. We know what the problems are. A lot of this can be done operationally. We-- there is some rough infrastructure in place that can deal with these issues. It's a matter of improving the information flow, making it more accurate and getting more information more quickly to participants. This is something that can be done. [ Background Music ] [ Matt Oldham: ] Thanks for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple Podcasts. [ Background Music ] [ Matt Oldham: ] For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at gao.gov.