Advertisement
investing

Dormant Accounts Pose a Risk for Buy-and-Hold Investors

If you haven't been in contact with your investment firm, your state may be quicker to seize your account as abandoned property.

My mutual fund company sent a letter saying that if it doesn’t hear from me soon, it will turn over my account assets to the state. My address hasn’t changed. How could this happen? - G.P., Baltimore

Many states changed their abandoned-property laws and now take over accounts much earlier than they used to. This is a growing problem for buy-and-hold investors.In the past, financial institutions would turn over accounts to the state as abandoned if they hadn’t heard from you for seven years after mail to you had been returned as undeliverable. Now, many states can take over your account if a financial institution hasn’t heard from you for three or five years, even if your address hasn’t changed, says Tamara Salmon, associate general counsel for the Investment Company Institute, a mutual fund trade association (see ici.org/lost_property for details).

Advertisement - Article continues below

You can file an abandoned-property claim and get your money, but you may miss out on any gains or dividends after it was sold because the state can liquidate your assets. (Search your state’s database at unclaimed.org or missingmoney.com.)

Salmon advises contacting your financial institutions at least every three years to let them know an account is active. Even logging into your account online can count as activity at some firms. And respond to any letter like the one you received—after verifying that it’s legitimate.

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census
Politics

17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census

Every 10 years, the 435 seats in the House of Representatives are reassigned based on the results of the U.S.
July 2, 2020

Recommended

10 Stocks to Invest in the Health Care Revolution
healthcare stocks

10 Stocks to Invest in the Health Care Revolution

These companies are fighting disease and improving our standard of care.
July 2, 2020
Cash In With This Gaming ETF
Technology

Cash In With This Gaming ETF

Cash in on the video gaming craze with this fund.
July 1, 2020
13 Best Vanguard Funds for the Next Bull Market
mutual funds

13 Best Vanguard Funds for the Next Bull Market

Optimistic that the bounce since March is indeed the start of the next bull market? Here are the 13 best Vanguard funds to help you make the most of i…
June 25, 2020
A Mid-Cap Fund With Big Gains
mutual funds

A Mid-Cap Fund With Big Gains

The fund’s best performers over the past year were software firms.
June 24, 2020