Workers changing jobs would have an easier time keeping track of their retirement plans, under bipartisan legislation introduced this week by Sens. Steve Daines and Elizabeth Warren.
Daines and Warren, D-Mass, said the measure would create an online database allowing Americans to keep track of their 401(k)s and other retirement accounts. The “Retirement Savings Lost and Found Act” would allow workers to more easily invest abandoned accounts into higher-yielding ones such as mutual funds or Treasury securities instead of money markets.
“This would help Americans if you are just starting out in the workforce or (are) a senior citizen who needs these dollars for retirement,” Daines said in an interview Thursday. “These are hard-earned dollars.”
Daines said the change wouldn’t increase costs for consumers or retirement account administrators.
Investment management company TIAA estimated in 2015 that 30 percent of employees – covering tens of millions of workers – left a retirement account at their previous employer. The Government Accountability Office estimated two years ago that millions of people have left at least two accounts behind.
Moving an account from one employer to another is difficult and time-consuming. Many workers, occupied with other duties linked to a change of jobs, fail to do it. Over time, they forget about the smaller accounts.
The GAO, the independent investigative arm of Congress, said an increase in 401(k) plans, frequent use of auto-enrollment, and shorter job tenures among younger workers has led to a significant spike in retirement accounts.
Daines said employers now can choose to move retirement plans into independently managed IRA accounts that charge a greater amount in fees than the interest returned to workers.
The Daines bill has received support from AARP and the Pension Rights Center.
“This bill is a common-sense solution that will help Montana workers, especially younger workers better claim and track their multiple retirement accounts,” said Tim Summers, state director of AARP Montana. “I see it as a win-win for Montanans’ retirement.”