‘Forgotten’ 401(k) accounts hold trillions of dollars, study shows

How many jobs have you had in your career where you participated in an employer-sponsored 401(k) account? When you left for another job, did you take your retirement savings with you?

Millions didn’t. A new update to Capitalize’s “The True Cost of Forgotten 401(k) Accounts,” produced in partnership with the Center for Retirement Research, reveals that the problem of “lost” 401(k) accounts is ballooning,  and with it, the hidden cost to individual savers. 

When workers leave a job, they typically face several options: roll over the account to a new employer’s plan (if allowed), move it into an IRA, cash it out, or (the path many default to) leave it where it is. It’s that last choice—inaction—that gives rise to “forgotten” accounts. Over time, poor fee structures, suboptimal investment allocation, and loss of oversight can erode value. 

Capitalizing on newly collected data, the report finds that forgotten 401(k) accounts now hold $2.13 trillion in assets, up nearly 30% since the mid-2023 mark. 

The number of accounts also continues to rise – 3.5 million were left behind in 2023, 4 million in 2024, and projections for 2025 suggest another 4.2 million could slip through the cracks. 

Fee drag and lost returns

The danger in a forgotten account isn’t just neglect, it’s active leakage. Once an employee is considered a “terminated participant,” the former employer may cease subsidizing administrative fees, shifting the burden entirely to the saver. Over time, these added charges, combined with underperforming or default investment allocations, can chip away at returns. 

In worst-case modeling, the authors estimate an individual could forgo over $500,000 across decades of compounding by failing to consolidate or properly manage these accounts. 

The report further notes that many forgotten accounts default to conservative portfolios (e.g. stable value or money market funds) and stop evolving with market growth, amplifying the underperformance.

Employer burden too

Forgotten accounts aren’t costless to firms either. Because many plan administrative and recordkeeping costs scale per participant—even dormant ones—employers may be absorbing hundreds of millions in added costs tied to inactive accounts. 

Several factors conspire to let these accounts slip into oblivion:

1. Clunky rollover process — Paperwork, legacy systems, and friction at job transitions discourage many from acting promptly.
2. Lack of visibility — Many savers don’t know how to track old plans or don’t receive clear information from departing employers.
3. Plan mergers & recordkeeper changes — When firms merge or switch custodians, account records may become harder to trace.
4. Procrastination or perceived hassle — Even when aware, many delay consolidating, assuming the effort or cost isn’t worth it.
   

What can savers do?

Under the SECURE 2.0 Act, the Department of Labor is building a national Retirement Savings Lost & Found Database, a centralized tool to help people locate abandoned accounts. 

Rolling old 401(k) balances into a current employer’s 401(k) or into an IRA can simplify oversight, reduce duplicate fees, and ensure more optimal investment allocation.

Even if you left a job years ago, you can reach out to your former employer or their recordkeeper, ask whether there’s a balance still in their 401(k), and request rollover documentation.

Once located, compare the fee structure, investment options, and fund performance of the old account against other alternatives. Moving to a lower-fee, better-managed account can significantly improve long-term growth.

What might seem like passive neglect – leaving a 401(k) behind after job changes – has quietly escalated into a systemic issue. Nearly one in four 401(k) dollars may now lie in forgotten accounts. With trillions at stake and the compounding effect of fees and underinvestment, the cost of inaction could be catastrophic for many retirement savers.

Fixing this problem may require better tools, simpler rollovers, and proactive engagement from savers. For anyone with a career that spanned multiple employers, the time to locate and consolidate dormant retirement accounts is now.