Great Resignation Drives 20% Jump in Forgotten 401(k) Accounts

The left-behind 401(k) accounts are estimated to hold about $1.65 trillion in assets, as of May.


The amount of forgotten 401(k) accounts—those left untouched when workers leave or change jobs—is growing all the time. As of May, Capitalize Money Inc. estimated that there are 29.2 million left-behind 401(k) accounts holding approximately $1.65 trillion in assets, up from 24.3 million and $1.35 trillion, respectively, in May 2021.

The number of forgotten 401(k)s and their assets both increased by more than 15% since May 2021, driven by the Great Resignation, a period of heightened job-switching in the wake of the COVID-19 pandemic, according to the New York-based firm that specializes in helping savers reclaim 401(k) rollovers. As a result, 3.8 million accounts were left behind in 2021, and 4.4 million in 2022.

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“We’ve seen people change jobs at elevated rates—and leave their 401(k) accounts behind as they go from job to job,” Gaurav Sharma, CEO of Capitalize, said in a statement. “This reflects one of the structural problems with our 401(k) system: Our retirement accounts remain tied to our employers and their 401(k) plans, leading to significant friction at the point of job change.”

Americans also remain unfamiliar with 401(k) fees, as 71% of respondents surveyed by Capitalize said people do not know the amount they are currently paying. Nearly half guessed they were paying less than 0.4% of total assets in 401(k) fees, but only 10% of all plans actually charge less than 0.4%.

Capitalize stated that even more concerning was the risk of misallocating savings. The firm reported that in a worst-case scenario, a badly allocated, high-fee 401(k) could be missing out on several hundred thousand dollars in foregone retirement savings over 30 years.

Capitalize estimated savings from badly managed 401(k)s could be almost $115 billion per year, similar to the firm’s May 2021 estimate.

The addition of more forgotten 401(k)s is inevitable, given the worsening economy and labor market, according to Capitalize. In the first quarter of 2023, job cuts totaled more than 270,000, an almost 400% increase from Q1 2022. The trend will likely persist on the heels of recent interest rate increases, causing more job losses.

Increased adoption of automatic enrollment means more workers are enrolling in 401(k)s than ever before, which should be a positive development, but when that take-up is paired with the rate of job-switching, the number of left-behind 401(k)s will inevitably increase as well, the firm noted.

Capitalize acknowledged that there are some measures put in place to address the forgotten 401(k) accounts. The SECURE 2.0 Act of 2022 included a provision to create a national lost-and-found database, offering a directory of 401(k) plan administrator contact details. The Department of Labor has until the end of 2024 to institute the lost and found, but the Employee Benefits Security Administration has scheduled stakeholder meetings on the topic this month to get started. According to Capitalize, while the provision is helpful, the firm does not expect it to provide real guidance or tools to take action or to be implemented until the end of 2024.

Capitalize’s updated analysis drew on a wide range of data sources, including updated IRS and DOL data, Bureau of Labor Statistics data, academic research and the firm’s own consultations with policy experts.

Capitalize is a venture capital-backed technology firm that helps users identify their workplace retirement plans and roll them into an IRA of their choosing. The firm launched in 2020 and received a $12.5 million investing round in 2022 led by Canapi Ventures.

Investment Product and Service Launches

Aptus Capital Advisors Launches New Enhanced Yield ETF; MetLife and Lyra Health Expand Workplace Mental Health Access; Alight Expands Global Employee Benefits Solution.


Aptus Capital Advisors Launches Large Cap Enhanced Yield ETF

Aptus Capital Advisors LLC announced the launch of the Aptus Large Cap Enhanced Yield ETF, an actively managed exchange-traded fund combining U.S. large cap equities with an equity options overlay.

“We’re proud to have assisted advisors in helping clients over the past decade and are excited to now offer a market beta strategy that provides income not reliant on certain equity styles and sectors typically associated with higher distributions,” JD Gardner, founder and managing member of Aptus Capital Advisors, said in a statement.

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The launch is the third strategy in the firm’s suite of actively managed enhanced yield ETFs. In the past year, Aptus crossed $2 billion in assets under management across its ETF lineup.

MetLife, Lyra Health Expand Access to Workforce Mental Health Solutions

MetLife and Lyra Health announced a new initiative to provide employees with access to mental health services as part of their recovery when they file a disability or absence claim.

This collaboration connects eligible employees to Lyra’s providers through a referral at the beginning of their claim. The approach will also help employers with the administrative tasks associated with disability claims and mental health resources.

“Lyra’s evidence-based mental health care and MetLife’s disability and absence management work in concert to help ensure that people can easily access high quality care when they need it most,” Sean McBride, chief revenue officer at Lyra Health, said in a statement.

Alight Expands Global Employee Benefits Solution

Alight Inc., announced the release of its global employee benefits solution, which offers administrative support and customer care for managing benefits programs.

“When you include the complexities of managing multiple vendors, languages, and time zones, it’s no surprise that global benefits remain a challenge for organizations and their employees,” Jan Pieter, vice president of business development at Alight, said in a statement. “[Our solution] enables organizations to provide their employees with benefit offerings in their language of choice and to personalize the process of tailoring their benefits.”

The solution is offered across more than 100 countries and in 32 languages. It is integrated into the Alight Worklife platform and powered by total rewards software partner Benify.

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