The purpose of the title of this blog is to bring up a relatively new concern that you should be aware of.

The states, as in the State of Texas in our case, have added a new layer of work for us in the brokerage industry.  I am certain it apples to the banking and insurance industries as well.

If a statement of your account is mailed to you and the statement is returned to the sender.  If it is returned a second or third time, depending on the custodian holding the account, we the advisor or securities broker are notified and are required to contact you.  We are supposed to make sure you have not moved or determine if the mailing address is correct.

If we are unable to contact you and verify where you are, your investment account will be escheated to the State.  Which means our state government will take your money.

You may inadvertently be funding a Texas highway or bridge.

In the state’s need for more revenue, they have stepped up and forced us to become more proactive to determine if you can be found.

Our Post Office is part of the problem as well.

I have had one of my accounts put on restriction because a statement was sent back to the custodian.  I have not moved in 24 years.  And all of my other statements were delivered.  But due to the statement being returned to the custodian I had to go through the motions to prove that the address of record was correct.

What does this mean to you?

If you have an old 401(k) account you have been ignoring.  Many people have multiple 401(k) accounts residing at past employers.  And you move to a new residence and do not change your address of record.  You may potentially lose your money.

If you are lucky and still read the newspaper, yes I said paper, you might get lucky and find your name on the list of those that have funds held by the state.

But, if it is a 401(k), an IRA, or even a regular investment account, you have not only potentially lost your money.  Upon recapture of those funds you have most probably triggered a taxable event.

Therefore, to add insult to injury, you incurred more expense in your time wasted and must pay an income tax on those funds.

Be proactive.

Keep track of your investment accounts.  Notify your advisor, broker or the Human Resource Department of prior employers that still hold your 401(k) account(s) that you have changed address.

And when you change jobs, it is our opinion that you should rollover your 401(k) to a self-directed IRA. It is the best action to take and maintain control over your money.  There are several reasons to set up a self-directed IRA in addition to the aforementioned.

When you change jobs and leave behind a 401(k).  In most likelihood no one is managing it for you.  Your allocation may be out of balance.  Your risk level may become higher due to your equity funds growing more than your bond funds.  As you age your risk tolerance may also change and your account may not be in sync with your new risk level.

These days many of you change employers often, you tend to leave a string of 401(k)s scattered amongst those employers.  That multiplies the amount of money you have left unwatched, unmanaged and ignored.  What do you think your rate of return, long term will be?

The cost of having those multiple accounts will further erode your funds.  There are fees that are duplicated from 401(k) to 401(k), IRA to IRA.

By combining all of your 401(k)s and traditional IRAs into one account you will reduce asset charges, custodial fees, administrative fees and commissions.  You will also be able to better diversify your investments and create more latitude in types of investments that will now be made available to you within the self-directed IRA.

I call upon to you to find those old 401(k) and IRA statements.  And any other investment statements.  Make sure the mailing address is current on all of them and that you are currently receiving those statements.

If you are set up to receive them electronically, then be sure to log onto the account and verify that your information is up to date.

And lastly, if you have a number of accounts that need to be combined, by all means please contact us so that we can help you combine them and or roll them over to an IRA.


Corey N. Callaway

Registered Investment Advisor

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