Folks, here’s something that ought to wake up even the sleepiest retirement-plan consultant: there are now an estimated $2.1 trillion in “forgotten 401(k)” assets out there — accounts people either abandoned, forgot about, or lost track of. That’s not pocket change. That’s systemic drift.
The Scope of the Problem
We’re not talking about a few stray accounts. We’re talking about trillions. The kind of number that forces you to squint and ask, “How did we let this happen?” What used to be anecdotal is now a deep structural issue. Between job changes, mergers, relocations, or just poor communication, these accounts slip through the cracks.
Why It Matters (Beyond the Headline)
1. Fiduciary exposure. Plan sponsors and administrators can’t wave this off as someone else’s problem. If participants come knocking (and they will), questions will be asked about due diligence, communication, tracing efforts.
2. Participant outcomes. Sure, some of these will be small balances. But left unchecked, even small balances can erode via fees, inflation, misallocation, or poor default investments. A forgotten 401(k) isn’t just “dormant”—it’s being whittled away.
3. Operational burden & inefficiency. The administrative drag of attempting to locate and reconcile these accounts, the headaches of potential litigation, the reputational risks—these are real, material costs.
What Can Be Done (Yes, There Are Moves)
· Proactive outreach & communication. Use data (postal, email, phone) to actively engage participants who haven’t interacted with their account in year(s).
· Automated tracing & matching technologies. Modern tools can help reconcile current and past addresses, employment records, or cross-entity databases to find “lost” participants.
· Default consolidation policies. When employees leave, making consolidation (or forced rollover) the default unless they opt out reduces fragmentation.
· Standardized disclosure and reporting rules. Benchmark what “best practice” looks like (timely statements, nudges, transparency) and push the envelope there.
· Collaborative industry efforts. Cross-plan data sharing (within privacy and regulatory bounds), third-party locate services, or even regulatory nudges can help reduce the burden on individual plan sponsors.
A Warning & a Call
Let me be clear: this is not a quaint administrative nuisance. This is a symptom of a retirement system under strain. If $2.1 trillion can just evaporate into “forgotten” accounts, how many other cracks are we ignoring? If we let complacency reign, we risk undermining confidence in workplace retirement plans.
My appeal to all of you managing, governing, advising: treat forgotten accounts as a first-order priority. Don’t relegate them to the “administrative back burner.” Get moving now — because those assets? They belong to people, not spreadsheets.
