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Saturday, April 22, 2006 - Page updated at 12:00 AM

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Keep track of old 401(k)s, pensions

As they flit from job to job, many American workers are leaving something valuable behind — money stashed in old 401(k) retirement plans or pension accounts.

Some workers have only a dim sense of where these accounts are, what return they're getting, how the funds are invested or how much their old accounts hold, notes certified-financial planner Sally McCray of Financial Advisory Partners in Bellevue.

"I've had clients tell me, 'No, I don't have any kind of pension,' and discovered they did," McCray says. "Or they think they have a pension coming, but they left before they vested."

It's the worker's responsibility to keep track of accounts from former jobs, McCray notes. If a worker moves several times and a retirement plan's administrator can't find you when you hit retirement age, your account may be forfeited to the state. Ouch!

To prevent this unhappy outcome, McCray recommends you:

Keep a file of retirement-account numbers from former employers.

Check yearly how the funds are invested and whether the account is getting a good rate of return. Or better yet:

Roll the old 401(k)s into an IRA you can control. (Details: page 9) IRAs typically offer more investment options than company 401(k) plans, McCray notes, giving investors more flexibility.

Track the company's fortunes if you do leave an old 401(k) or pension in place with a former employer. Pension and 401(k) plans may be changed or terminated if the company runs into financial trouble — or even if the company continues to do well.

McCray recommends transferring funds to your own IRA if you have any doubts about a former employer's stability.

With pensions, explore taking a lump-sum payout and reinvesting the money elsewhere. If your plan allows it, this may be a better option than waiting for a monthly retirement check that may not be there decades from now.

— Carol Tice

Copyright © 2006 The Seattle Times Company

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