The government is holding millions in unclaimed retirement money – AOL Finance

When you’re saving for retirement, every bit can help — even if it’s a windfall from an unclaimed source. One person in Texas, for example, is owed $395,000 from the federal government. It’s not an uncashed lottery ticket. The amount is pension money left behind by someone who either forgot the account existed or, perhaps more likely, may have died before claiming it, in which case it awaits his or her heirs.

That’s one outsized example of the financial problem of unclaimed property. State, federal and local governments often hold money that people have forgotten is theirs — and total waiting to be claimed runs well into the billions.

Passing Up Pension Money The Pension Benefit Guarantee Corporation, the federal agency that protects retirement savings by taking control of private employer pension funds being closed or that are in trouble, says that millions of pension dollars are owed in total to tens of thousands of people.

The most current data PBGC could provide, from September 2016, show 24,000 people with a total of $67 million in unclaimed retirement money. The sums range from a measly $5 (easier to send a Starbucks card) to the top, the aforementioned $395,000. See the top 10 states in terms of unclaimed pension money here.

The pot may get bigger under a proposed rule that would add terminated 401(k) and most other defined-contribution plans, in which people and employers regularly add set amounts.

“If I had a payee in Montana and I’m in New Jersey, I have to turn over the last claimed check to Montana,” said Barry Weisman, a partner in the State & Local Tax Group and Tax Controversy Services at New York City accounting firm Anchin, Block & Anchin. However, if a company lacks an address for someone, it turns the money over to its state of incorporation. That could be where the company has its headquarters or might be another state entirely. For example, many businesses incorporate in Delaware. People who don’t realize the rules may check with the wrong state.

Before you get too excited about the prospect of finding lost money, beware of scams. Criminals will contact people and claim they are owed property, which might be true or not. Then they ask for money to process the claim and leave the victim high and dry. “One of the things we tell people up front is we don’t ask for any payment until you get paid,” Zwick said. If someone wants payment in advance, it’s likely a scam.

 

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