By Ellen Hoffman
Consider this story of a California man whose property landed in the hands of the state's unclaimed-property office. The 74-year-old somehow lost track of a bank account that contained more than $270,000 in CDs, dividend income, and interest from bonds, as well as more than 37,000 company shares. The stocks, in outfits such as Mobil and Bank of America, yielded more than $1 million.
Then there's the woman in her 70s who was widowed more than 10 years ago. Recently a mutual fund -- unable to locate her -- notified her son that it had custody of his father's pension, which has never been claimed. The widow is now jumping through bureaucratic hoops to establish her identity and right to the pension. She doesn't know yet how much it's worth -- or what the impact may be on her tax bills.
Both of these recipients apparently didn't need the windfall to pay their basic living expenses. However, the smaller a cushion you have for retirement, the more important a windfall could be -- especially if you find the money in time to invest it for several years before retiring.
KNOW THE RULES.
Stocks and bonds, bank accounts, uncashed checks, pensions, 401(k)s, IRAs, and utility deposits are only some of the many kinds of assets that go unclaimed every year. California, for example, announced a few months ago that it has collected $67 million in stock and cash for nearly 100,000 state residents as a result of conversion of MetLife (MET ) mutual insurance companies to shareholder entities.
Generally, financial institutions must turn abandoned assets over to state unclaimed-property offices if the institution is unable to locate the owner for a certain period of time. Each state has its own rules on timing transfers of abandoned property.
In New Jersey, unclaimed utility deposits revert to the state one year after the service ends. For mutual funds, it's three years after a second mailing (attempt to contact owner) is returned by the Post Office. And for safe-deposit-box contents, five years after the rental period expires. Money is held forever, but tangible items found in a safe-deposit box may be auctioned after a certain number of years, depending on the state.
State unclaimed-property offices develop lists of people whose assets they hold. Residents are encouraged to look for their property in lists publishing by the state in local newspapers, via Internet search systems, and in press releases. But every year, millions still remain unclaimed. Cyndi Wickham, Trust Property Manager for Oregon, says on an annual basis, her states receives an average of $20 million and distributes only about $6 million.
WHERE TO LOOK.
So, how do you find out if you have assets you've lost track of? At the Web site of the National Association of Unclaimed Property Administrators, you can contact your own state's office -- or that of another state where you may have lived or left behind property such as a bank account.
To do a comprehensive checkup on potential retirement resources, however, you need to check several other places. If you worked for a company that went bankrupt or merged, you might find a pension in the care of the Pension Benefit Guaranty Corporation, a government agency that takes over terminated pension plans. The PBGC now has $75 million in unclaimed pension benefits for 26,000 individuals. The amounts range up to more than $264,000, and the average is about $3,675.
To see if any of this money is yours, go to the Pension Search directory. These are traditional pensions, so you can't get the money until you meet requirements of age or whatever the terms of your plan were, but you should find out now.
BANKED AND FORGOTTEN.
The Federal Deposit Insurance Corporation (FDIC), which has taken over some assets of failed banks, has $42 million in unclaimed deposits from 34 institutions that closed before August, 1993. One owner located by the agency had forgotten about $239,000 in proceeds of CDs. A spokesman says in the case of the Bank of New England in Boston, "the majority of the depositors contacted" about $8.7 million worth of accounts were holders of forgotten IRA accounts.
Penny Marlin, a financial planner in Miami, points out that in the earlier days of IRAs, "there were not so many options" of where to invest them, so lots of people put the money into bank accounts and then forgot about it.
OUNCE OF PREVENTION.
Social Security may turn out to be the source of another financial asset you may not know you have. The Social Security Administration now has more than $420 billion (yes, billion) in wages not credited to Social Security accounts because it doesn't know who earned the money. Wages go into the "suspense file" if you change your name, marital status, or address and don't notify the agency -- or if mistakes are made in reporting such information.
If any such funds are credited to your account, the result could be a higher benefit. For details on how to pry lost wages out of the suspense file, contact Social Security Social Security on the Web or by calling 800 772-1213.
How can you avoid losing track of financial assets that could help your retirement? Start by taking a snapshot of your potential assets: list all the jobs you've ever had and any 401(k)s or pensions you think you garnered from them. Search your files to compile a list of bank or investment accounts, CDs, and the like. Then set up a tracking system that will help you in the future.
If you work with a financial planner, he or she will likely have some kind of a financial document locator form for recording key account numbers, insurance policies, and personal data such as Social Security numbers. The Certified Financial Planners Board of Standards offers such a form on its Web site.
Carolyn Barry Frost, spokesperson for the Illinois unclaimed-property office, offers these tips:
• Keep records of all bank and savings accounts, stock certificates and the like.
• Prepare a list of all accounts to be notified when you change addresses, because this is one of the most common reasons that money is lost.
• Share the list with a trusted family member or adviser.
• If you change your name, be sure to notify your bank, credit-card issuers, broker, employer, 401(k) administrator, mortgage lender, and other key financial contacts.
• Cash all dividend and other checks promptly.
• And if you have a safe deposit box, tell someone about it.
To make an effective plan and to enjoy your retirement -- or to maximize benefits to your heirs -- it's only common sense to make the effort to know where all of your resources are. And, by the way, don't forget to check under the mattress.
In addition to writing Your Retirement for BusinessWeek Online, Hoffman is the author of The Retirement Catch-Up Guide and Bankroll Your Future Retirement with Help from Uncle Sam. You can contact her through her Web site, www.retirementcatchup.com
Edited by Patricia O'Connell