The W-2 Paper Trail
While many people focus on making contributions during this period, it’s easy to overlook old or inactive 401(k) accounts that may still exist. In fact, nearly half of American taxpayers report only thinking about their finances when it’s time to file taxes, which can lead to missed opportunities for planning and managing retirement savings effectively. Filing taxes highlights your income, withholdings, and recent contributions. The real value, however, comes from using that paperwork as a chance to review your past financial decisions and take stock of your future.
Taking a moment during tax season to review your retirement accounts, including older or inactive ones, can help you see the full picture and make informed decisions for your long-term retirement strategy.
Your W-2s and 1099s are more than just tax forms, they can also serve as records of past employers and income. If you have a W-2 from a former job, check out Box 12. Certain codes there can indicate whether you contributed to a workplace retirement plan. Taking a moment now to review these documents can help you see the full picture and make informed decisions for your long-term retirement strategy.
The Data Snapshot: The Rise of Dormant 401(k)s
Workplace retirement plans have become more widely available in recent times. More employers now offer 401(k)s, and more employees have access to participate in them. At the same time, engagement has not kept pace.
PensionBee recently reported that over 30% of funded workplace retirement accounts are projected to be dormant by 2026. That figure was closer to 20% in 2012. That’s a huge leap in a relatively short amount of time.
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Even more striking, it is estimated that dormant accounts are growing nearly three times faster than active ones. This doesn’t mean people are opting out of saving. It means accounts are being left behind. The system succeeds at getting people started in retirement plans but struggles to keep them involved over time.
Retirement Accounts in a Mobile Workforce
On paper, the 401(k) system looks stronger than ever. More employers offer plans, enrollment starts earlier, and contributions can be automatic.
But careers have evolved over that time. With workers switching jobs an average of 12 times over a lifetime, few stay with a single employer for long and each move can leave behind another retirement account.
Those accounts don’t just disappear but attention to them often does. Many people plan to deal with old accounts later, and “later” can turn into years. The system was built for long, stable careers, but today’s workforce is far more mobile, and the structure hasn’t fully caught up.
