An increasing number of American workers are losing sight of their retirement savings, potentially missing out on a significant portion of their financial nest egg.
Trillions in retirement assets abandoned
A recent analysis from Capitalize, a service that assists individuals in transferring retirement accounts, revealed that there are 31.9 million unclaimed 401(k) accounts as of July 2025. Together, these accounts hold an estimated $2.1 trillion in assets. This represents a 30% increase from its previous report in mid-2023.
Private sector employees — who are often offered 401(k) plans by their employers — are not the only ones impacted. According to Capitalize, federal workers are expected to abandon nearly three million Thrift Savings Plan accounts by the end of 2025, driven by layoffs in the federal government.
What’s causing 401(k)s to be neglected
While frequent job changes and layoffs contribute to why many 401(k)s are forgotten, there are other factors at play. More workers are enrolling in retirement plans, partly due to legislation like the Secure 2.0 Act that expanded automatic enrollment.
Moreover, transferring a 401(k) to another retirement plan is a manual and often complex process. To initiate a rollover, you must contact your plan administrator, who will then transfer funds to your new retirement account or IRA, or send you a check to deposit. If you receive a check by mail, you have 60 days to deposit it, or the funds may be subject to taxation. The IRS can waive this requirement in certain circumstances, but it involves a separate process.
It is understandable why some individuals may postpone deciding what to do with their accounts, or even completely forget about them. If they were enrolled automatically, they might not realize the need to initiate a rollover. Looking ahead, 401(k) rollovers could become even more intricate: Recent policy changes promote alternative assets, such as private equity, in 401(k)s, but they are less liquid compared to the mutual funds that are predominant in most plans.
The repercussions of neglecting a 401(k)
You have the option to leave your 401(k) untouched, but this decision could potentially result in higher fees and lower returns over time.
Capitalize estimates that the average abandoned 401(k) contains around $66,691, an 18% increase from $56,616 in May 2023. This growth is attributed to the stock market, but within an account where investments are actively managed, rebalanced, and monitored, the potential returns could be even greater.
In a worst-case scenario involving high fees and inappropriate asset allocation, Capitalize warns that this neglected 401(k) account could lead to over $500,000 in lost savings for an individual.
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Forgotten 401(k) in a money market fund |
Well-allocated, low-fee IRA or 401(k) |
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What to do with your 401(k) if you leave a job
Looking to avoid leaving money unclaimed? Familiarize yourself with the options for your 401(k) plan, which can assist you in making informed decisions.
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Transfer to your new 401(k) plan. If you are transitioning to a new job with a company retirement account, you may consider transferring your existing 401(k) into the new plan. Communicate with both the administrators of your old and new plans to understand their procedures, and stay mindful of deadlines — especially if you receive a paper check that needs to be deposited.
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Cash out your 401(k). If you are at retirement age, you might contemplate withdrawing funds from your 401(k). If you opt for this route, consider the tax implications and potential impact on your tax bracket and Medicare premiums. If you are not yet at retirement age, an early withdrawal from your 401(k) could result in taxes and penalties.
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Leave it as is. In certain circumstances, maintaining the current status may be the best choice. Compare the fees and investments of the plan with what you could potentially access elsewhere, like in an IRA. Also, establish a plan to regularly review the account to monitor investment performance and potential fee changes.
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