It has become common for 401(k) plans to include a significant
number of orphan accounts due to employees changing jobs more
frequently and much of the workforce hitting the retirement age. If
your plan has a lot of them, it might be time to consider actively
pursuing these accounts. The answer depends in part on how your
plan charges administrative fees and the value of these orphan
accounts.
Examine costs
Orphan accounts are accounts of 401(k) plan participants who are
no longer employees. It is not unusual for about 10% of a
plan's participant census to consist of terminated
employees.
When this happens, it is important you consider the
administrative costs. An upside of orphan accounts could mean there
is a bigger asset pool, which incurs lower per-capita charges. If
the collective value of those former employees' accounts is
significant, the possible benefit is that all participants are
benefiting from lower administrative and asset management
