Did you know there’s nearly $2.1 trillion in forgotten 401(k) and retirement accounts scattered across the United States? On this episode of The Financial Hour of The Tom Dupree Show, hosts Tom Dupree, Mike Johnson, and James Dupree tackle what they call America’s abandoned 401(k) crisis — and lay out a clear path for recovering lost retirement savings before it’s too late.
With the average American staying at an employer for just 3.9 years, it’s no surprise that old 401(k) accounts get left behind. But those forgotten dollars represent real retirement income that could be working harder for you right now. Whether you’re in your thirties with scattered accounts or approaching retirement with assets spread across multiple former employers, the team at Dupree Financial Group explains why consolidating your retirement accounts into a personalized investment management strategy could be one of the most important financial decisions you make.
Why Abandoned 401(k) Accounts Are Costing You More Than You Think
The problem goes deeper than simply losing track of an old account. As Mike Johnson explained during the episode, there are two distinct sides to this crisis.
The first is accounts that people genuinely forget about — they leave a job, move to a new city, and a 401(k) with a few thousand dollars slips through the cracks. The second, and far more common scenario, is when people know they have old accounts scattered around but never get around to consolidating them.
“You have all these various pieces scattered around. You haven’t forgotten about them — they’ve just been sitting there. And there’s really no clear plan, no management, anything like that.” — Mike Johnson
The costs of inaction add up quickly. Old employer plans charge administration fees and internal fund expenses that steadily eat away at your balance. Without active management, your investments may have been moved to money market funds or stable value options without your knowledge — meaning you’ve potentially lost years of compounding growth.
Tom Dupree put it simply: “Money that’s together is better managed.”
The Hidden Costs of Scattered Retirement Accounts
Beyond the obvious risk of forgetting an account entirely, keeping retirement savings spread across multiple former employers creates a series of compounding problems.
- Fees erode your balance. Plan administration costs and internal fund fees are deducted from accounts whether you’re contributing or not. Over time, a dormant account can lose significant value to expenses alone.
- Opportunity cost is real. An old 401(k) sitting in a bond fund or money market account for 20 years has missed potentially decades of growth. As Mike Johnson noted: “How much did you leave on the table by just leaving it on autopilot?”
- Logistics become a nightmare at retirement. Multiple accounts mean multiple logins, multiple statements, and multiple required minimum distributions to calculate and manage once you reach age 73.
- No cohesive investment strategy. Without consolidation, there’s no way to ensure your overall allocation reflects where you are in life — whether that’s aggressive growth in your thirties or income-focused positioning as you approach retirement.
- Plan changes happen without you. Third-party administrators regularly swap out fund options within employer plans. If you’re not watching, your money may end up in an investment that no longer fits your goals.
How to Find Your Lost 401(k) Accounts
If you think you may have retirement money sitting somewhere you’ve forgotten about, there are several ways to track it down. Mike Johnson walked listeners through the key resources available.
Contact your former employer. This is the most direct route. Many companies can tell you whether you still have a balance in their retirement plan and connect you with the plan administrator.
Use the federal government’s search tool. In 2024, the Department of Labor launched lostfound.dol.gov, a searchable database specifically for private, non-governmental employer plans. You can search by Social Security number to locate plans connected to your work history.
Check state unclaimed property databases. Some abandoned retirement assets may have been turned over to your state’s unclaimed property division, which maintains searchable records.
The statistic is striking: 54% of savers don’t know where their old 401k is, and 61% don’t know their login credentials. If that sounds familiar, you’re far from alone — and the solution is more straightforward than most people realize.
Your Four Options for an Old 401(k) (And Which One Actually Makes Sense)
Once you’ve located an old retirement account, you have four choices. Mike Johnson broke them down clearly during the episode.
Option 1: Leave it where it is. This is the easiest path — and almost always the worst one. The account sits unmanaged, accumulating fees with no investment strategy behind it. As Mike put it, this makes sense “0.00001% of the time.”
Option 2: Roll it into your new employer’s 401(k). Better than leaving it behind, but still limiting. Most employer plans offer only 20 to 30 investment options, with many being target-date or broad index funds that may not fit your specific situation.
Option 3: Cash it out. If you’re under 59½, you’ll face penalties and taxes. Even above that age, cashing out means losing the tax-advantaged compounding that makes retirement accounts so powerful. This should generally be a last resort.
Option 4: Roll it into a professionally managed IRA. This is the approach the Dupree Financial Group team recommends for most people. An IRA gives you access to individual securities, ETFs, mutual funds, and a fully customized investment philosophy tailored to your goals and timeline. There are no tax consequences for a direct rollover, and you gain the ability to build a cohesive plan across all your retirement assets.
The Power of Roth Conversions for Younger Savers
One of the episode’s most actionable takeaways was Mike Johnson’s advice for younger workers with small, stranded 401(k) accounts.
“If you’re in your twenties or thirties and you have some small legacy 401(k) stranded accounts, you can move that to an IRA and it would probably make sense to convert that to a Roth while you’re in a lower tax bracket.” — Mike Johnson
The math is compelling. Pay a small tax bill now on a relatively modest balance, and that money compounds tax-free for the next 30 or more years. The team also discussed how Roth conversions were particularly powerful during the 2008–2009 financial crisis, when account values were depressed — converting low balances meant paying taxes on less and then watching all the recovery growth accumulate tax-free.
For those closer to retirement, gradual Roth conversions can still make sense. The strategy involves filling up your current tax bracket with conversions each year, reducing future required minimum distributions and creating tax-free income in retirement. Tools like Morningstar’s retirement planning resources can help you model how different conversion amounts affect your long-term tax picture.
In-Service Rollovers: A Strategy for Workers Over 59½
If you’re still working but have reached age 59½, you may have an option many people don’t know about: the in-service rollover.
Most employer plans allow participants who are 59½ or older to move existing assets out of the 401(k) and into an IRA — while continuing to make contributions and collect any employer match in the plan. This means you can begin building an income-focused portfolio years before you actually retire.
“At 59 and a half, you roll it to an IRA and then you’re preparing for retirement… you get that income stream rolling so that machine is now working.” — Mike Johnson
The Dupree Financial Group team structures these rollovers around their dividend-focused investment approach, building portfolios of quality companies that generate consistent income. By the time you retire, the transition is seamless — your portfolio is already generating dividends, your relationship with your advisor is established, and linking your IRA to your checking account for retirement income is as simple as flipping a switch.
Why Compounding Favors Those Who Start Now
James Dupree brought a generational perspective to the conversation, noting that while younger workers may understand the concept of compounding better than previous generations, many still haven’t taken action on it.
Tom Dupree shared a perspective from his 47 years in the investment business: “Everybody who’s got a large account — it started with a small one. That’s how it works.”
The team emphasized that the size of your starting balance matters far less than getting that money working for you under professional management. A few thousand dollars left in an old 401(k), properly invested and compounded over 20 or 30 years, could grow into a meaningful piece of your retirement income.
James illustrated the point with a personal example — calculating how much his girlfriend could accumulate by investing the daily savings from making espresso at home instead of buying Starbucks. The numbers were eye-opening, and the principle applies directly to abandoned retirement accounts sitting idle.
Key Takeaways From This Episode
- Nearly $2.1 trillion in retirement savings is sitting in forgotten or unmanaged accounts across the U.S.
- Dormant 401(k) accounts lose value through hidden fees, opportunity costs, and unmonitored investment changes.
- The federal government’s lostfound.dol.gov database can help you locate old employer plans.
- Rolling old 401(k) accounts into a professionally managed IRA provides more investment options, lower fees, and a cohesive retirement strategy.
- Roth conversions on small, stranded accounts can be especially powerful for younger workers in lower tax brackets.
- In-service rollovers at age 59½ let you begin building retirement income while still working and collecting your employer match.
- Consolidating scattered retirement assets into one managed portfolio allows for coordinated tax planning, income generation, and a smoother transition into retirement.
Frequently Asked Questions
How do I find out if I have an old 401(k) from a previous job?
Start by contacting former employers directly. You can also search the Department of Labor’s database at lostfound.dol.gov, which was launched in 2024 specifically for locating private employer retirement plans. State unclaimed property databases are another resource worth checking.
Is there a tax penalty for rolling over a 401k to an IRA?
No. A direct rollover from a pre-tax 401(k) to a traditional IRA has no tax consequences. Similarly, Roth 401(k) assets can roll to a Roth IRA without triggering taxes. The key is ensuring the rollover is done directly — trustee to trustee — rather than taking a distribution and redepositing. The IRS rollover chart outlines exactly which account types can transfer into which.
What is an in-service rollover?
An in-service rollover allows employees who are 59½ or older to transfer assets from their current employer’s 401(k) into an IRA while still working and contributing to the plan. This lets you begin building a managed retirement portfolio before you actually retire.
Why shouldn’t I just leave my old 401(k) where it is?
Dormant accounts accumulate plan administration fees and internal fund costs without any active management. Investment options may change without your knowledge, and the money isn’t aligned with your current financial goals or retirement timeline.
What’s the difference between a 401(k) and an IRA for investment options?
A 401(k) typically offers 20 to 30 investment choices selected by your employer’s plan administrator, usually mutual funds and target-date funds. An IRA gives you access to individual stocks, bonds, ETFs, mutual funds, and other securities — allowing for a fully customized investment strategy.
Should I convert my old 401(k) to a Roth IRA?
It depends on your current tax bracket versus your expected bracket in retirement. If you’re in a lower bracket now — especially if you’re younger — converting to a Roth allows all future growth to compound tax-free. The team at Dupree Financial Group can help you evaluate whether a conversion fits your specific situation.
Schedule Your Complimentary Portfolio Review
Have you worked for multiple employers over the years? You may have retirement money sitting in old 401(k) accounts that could be working harder for you. The team at Dupree Financial Group can help you locate scattered retirement assets, evaluate your options, and build a consolidated, income-focused portfolio designed for where you are in life right now.
No obligation. No products to sell. Just an honest look at your situation.
Call (859) 233-0400 or visit dupreefinancial.com/book to schedule your complimentary consultation.
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Dupree Financial Group is a registered investment advisor. All investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. This content is for informational purposes only and should not be considered personalized investment advice. Please consult with a qualified financial professional before making any investment decisions.
