The Retirement Red Flag No One Talks About
Written by
G. Brian Davis
Edited by
Zuri Anderson
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A 2025 study by Capitalize estimates that Americans have forgotten and abandoned 31.9 million 401(k) accounts. The total retirement savings in those accounts: $2.1 trillion. That’s $2,100,000,000,000, to convey its full weight.
It gets to the heart of one of the greatest retirement red flags that no one talks about: Americans having too many accounts. Beyond the obvious risk of forgetting about the account — like the 31.9 accounts found by Capitalize — too many retirement accounts come with other risks, as well.
Unknown Asset Allocation
In a single account, or even two accounts at the same brokerage, it’s relatively easy to view your asset allocation. The brokerage can likely break down your stocks versus bonds versus alternatives, and then further break down domestic versus international and so forth.
But what happens when you have two, three, four 401(k) accounts, all at different custodians? It gets much harder to track how much you have in each asset type. And that says nothing of your IRA accounts, your taxable brokerage accounts and other investments.
If you don’t know your asset allocation, you can’t rebalance your portfolio. You’ll also end up with duplicate investments, which adds to your risk.
Tax Planning Complications
“When you’re dealing with pre-tax dollars in one place, Roth money in another and after-tax funds somewhere else, coordinating moves like conversions and withdrawals becomes a lot more complicated,” notes Anthony Saccaro, president at Providence Financial & Insurance Services.
It also gets complicated when you receive 1099s, and boosts the odds of one of them being forgotten or lost. That sets you up for trouble with the IRS.
Beneficiary Tracking
You set the beneficiary for each account. But with each account you stack on, the odds increase that you’ll lose track of who should get what, or update your beneficiary as your wishes change.
“As an estate planning attorney, I’ve seen deceased or ex-spouses get the money when the account holder passed away because the beneficiary form was never updated,” adds Saccaro. “If something happens to you, that’s the last thing you want your family sifting through.”
Backdoor Roth Conversions
Having multiple retirement accounts makes it complicated to make a backdoor Roth conversion. Financial planner Jay Zigmont of Childfree Trust notes that the IRS rules get complex quickly.
“When you do a backdoor Roth conversion, you need to have no money in any traditional IRAs; otherwise, your post-tax and pre-tax contributions get mixed,” according to Zigmont. “If you don’t account for a traditional IRA and do a backdoor Roth, you may have a tax liability, and you will not be reporting accurate information on your taxes.”
Incorrect RMDs
If you lose track of your retirement accounts, you won’t take the required minimum distributions (RMDs).
“As you reach RMD age, you need to know the total balance across all traditional accounts to calculate your RMDs,” adds Zigmont. “If you miss an account, you are likely to take out too small of an RMD and may face considerable IRS penalties.”
Fortunately there’s a simple fix: Rollover your old 401(k) accounts to your IRA. Do it now, before you forget — or add to the $2.1 trillion in forgotten assets.
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