vanguard account turned over to government??

[mistymoney]

Is this real?

someone had a small roth account in an index fund at Vanguard and didn't log in for years, tried once or twice, but they are young - under 30 - and it wasn't a priority.

Is there a law that if you don't log in they turn it over to government as unclaimed money and it's a distribution? It can't have been more than 10 years.

I'm stunned. Is this a scam?

[mistymoney]

person is asking me for help because I had recommended vanguard to them for this :(

[NotJen]

Was their contact information at Vanguard correct?  Is it possible Vanguard tried to contact them and never got a response?

Not Vanguard, but another company I’ve done business with contacted me about a small balance last year, and the letter said if I didn’t respond, the balance would be turned over to my state’s unclaimed property.

[Omy]

It's real. It's considered abandoned/unclaimed property and turned into the state if the account is quiet for 2 or 3 years.Vanguard probably attempted to notify them. It's relatively easy to claim the money back, but it's considered a distribution and may have tax consequences. Ask me how I know...

[mistymoney]

It's real. It's considered abandoned/unclaimed property and turned into the state if the account is quiet for 2 or 3 years.Vanguard probably attempted to notify them. It's relatively easy to claim the money back, but it's considered a distribution and may have tax consequences. Ask me how I know...

thanks! yes, they had a letter, but didn't followup.....

where is the money? It is not listed in the state's unclaimed property. Found some other money there for them but not this.

[ATtiny85]

… they had a letter, but didn't followup.....

This is the sort of line that belongs in the first post.

Your “someone” will have pay a little tuition for this life lesson.

[mistymoney]

now we are worried someone may have claimed the unclaimed property? this is such a cluster, so dumb. Why can't people just invest and leave the money there? Maybe register with unclaimed? but to take it out of investments, criminal!

will call tomorrow? Now I'm feeling like it should have been with state and it is gone.

[iluvzbeach]

There may be a period of time between when Vanguard turns it over to the state and the state gets it recorded and available for the owner to claim. My guess is that this could take anywhere from 3-6 months. It may be worth seeing if Vanguard has truly turned it over yet, or if it’s in process and can possibly be recovered and returned to the account.

[NotJen]

There may be a period of time between when Vanguard turns it over to the state and the state gets it recorded and available for the owner to claim. My guess is that this could take anywhere from 3-6 months. It may be worth seeing if Vanguard has truly turned it over yet, or if it’s in process and can possibly be recovered and returned to the account.

This exactly.  The letter I got (from not-Vanguard) said that it would take a period of time (I was thinking 6mo-1yr, but I don't have the letter in front of me) before I would be able to re-claim the money.

[Ramparts]

There's a Planet Money episode about this, called the Escheat Show: https://www.npr.org/2020/01/24/799345159/episode-967-escheat-show

The underlying story is about a guy who bought a few thousand dollars of Amazon stock in the 90's, and goes to cash it out in 2015 when it would be hundreds of thousands, only to find out it was taken by the state of Delaware years ago. (Now it looks like it would be worth over $2M or so?)

[Paul der Krake]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

[nereo]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Yeah, I’m not really seeing the outrage here. It sounds like vanguard made attempts to notify the owner or the dormant account after years of inactivity. I get being frustrated at having to track down “their” money, but I’m unclear how you think vanguard should have handled this differently.

[jim555]

Lots of people die with small accounts no one knows about so it goes to the state unclaimed property department eventually.

[joe7886]

was a beneficiary set up? would they be contacted in this situation?

[Omy]

We had an old, small, HSA account that we'd lost track of. We didn't get a notice from the company, but the state did send us a notice that we had unclaimed property. It was annoying but didn't have huge consequences other than having to file an extra form in our tax return.

Fortunately, that inspired us to stay on top of our other accounts to avoid bigger financial consequences in the future.

[Miss Piggy]

How exactly does someone prevent this from happening? What kind of interaction does Vanguard need, and how frequently? I log in every few months to check balances, but that's it. Is that enough to not be dead?

[charis]

How exactly does someone prevent this from happening? What kind of interaction does Vanguard need, and how frequently? I log in every few months to check balances, but that's it. Is that enough to not be dead?

This is my question. People leave jobs when they are younger and don't touch their 401ks for years, because why would they? My spouse has a couple that haven't had activity in years apart from being connected to Mint.

[Omy]

We log in quarterly to all of our accounts (or you can call their customer service to check in). Open all statements to see if your account has been flagged. If you do this at least annually you should be ok.

[ATtiny85]

How exactly does someone prevent this from happening? What kind of interaction does Vanguard need, and how frequently? I log in every few months to check balances, but that's it. Is that enough to not be dead?

This is my question. People leave jobs when they are younger and don't touch their 401ks for years, because why would they? My spouse has a couple that haven't had activity in years apart from being connected to Mint.

I would think the Mint connection would qualify as activity, so it makes sense you have not had issues. It is basically logging in, right?

[nereo]

How exactly does someone prevent this from happening? What kind of interaction does Vanguard need, and how frequently? I log in every few months to check balances, but that's it. Is that enough to not be dead?

From experience I'd say that Vanguard checks annually to confirm the account is active and verify mailing address, etc.  If you log in at least once a year (and/or are actively contributing) there's no worries.  If it goes much longer than a year they mark your account as "dormant" and then they try to contact you by email and by snail-mail to your address listed. They do this for several quarters (probably a couple of years).

At least that was my experience when I lived abroad.

[charis]

How exactly does someone prevent this from happening? What kind of interaction does Vanguard need, and how frequently? I log in every few months to check balances, but that's it. Is that enough to not be dead?

This is my question. People leave jobs when they are younger and don't touch their 401ks for years, because why would they? My spouse has a couple that haven't had activity in years apart from being connected to Mint.

I would think the Mint connection would qualify as activity, so it makes sense you have not had issues. It is basically logging in, right?

One would think, but I have no idea.  We aren't planning to move, so it probably won't be an issue anyway, but it's a good question.

[mistymoney]

There may be a period of time between when Vanguard turns it over to the state and the state gets it recorded and available for the owner to claim. My guess is that this could take anywhere from 3-6 months. It may be worth seeing if Vanguard has truly turned it over yet, or if it’s in process and can possibly be recovered and returned to the account.

This exactly.  The letter I got (from not-Vanguard) said that it would take a period of time (I was thinking 6mo-1yr, but I don't have the letter in front of me) before I would be able to re-claim the money.

they will call vanguard today.

we both found some unclaimed money on the state site, lol! But it was super worrying that this money wasn't there. Hopefully will get some answers.

[mistymoney]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Yeah, I’m not really seeing the outrage here. It sounds like vanguard made attempts to notify the owner or the dormant account after years of inactivity. I get being frustrated at having to track down “their” money, but I’m unclear how you think vanguard should have handled this differently.

the outrage is that you think it is invested and then it is just lying dormant somewhere! eroding due to inflation even!

it's not the stoneage or the 1800's even. Why do the assets have to be cashed out of investments and transferred over rather than just a notice to the state:

Here's a list of people who haven't logged in? List it on the state site or whatever. To do whatever they suppose transferring to the state is accomplishing. It's not like the state is doing any with it - to notify or find people or manage the money or whatever.

everything is electronic, there is no reason for these draconian measures. All these silly privacy policy you get notified about all the time, and they can't verify you remain in existance if you don't log in?

Seems very antiquated to me.

[nereo]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Yeah, I’m not really seeing the outrage here. It sounds like vanguard made attempts to notify the owner or the dormant account after years of inactivity. I get being frustrated at having to track down “their” money, but I’m unclear how you think vanguard should have handled this differently.

the outrage is that you think it is invested and then it is just lying dormant somewhere! eroding due to inflation even!

it's not the stoneage or the 1800's even. Why do the assets have to be cashed out of investments and transferred over rather than just a notice to the state:

Here's a list of people who haven't logged in? List it on the state site or whatever. To do whatever they suppose transferring to the state is accomplishing. It's not like the state is doing any with it - to notify or find people or manage the money or whatever.

everything is electronic, there is no reason for these draconian measures. All these silly privacy policy you get notified about all the time, and they can't verify you remain in existance if you don't log in?

Seems very antiquated to me.

I mean, I kinda see why you'd be annoyed, but the solution seems well established, nearly effortless and extremely accessible.  Just spend 5 minutes checking up on accounts once every 18 months, and/or respond to mailers. Why create an additional registry (which itself is a doorway to fraud)? What will that do which the current system does not?

[Dicey]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Yeah, I’m not really seeing the outrage here. It sounds like vanguard made attempts to notify the owner or the dormant account after years of inactivity. I get being frustrated at having to track down “their” money, but I’m unclear how you think vanguard should have handled this differently.

the outrage is that you think it is invested and then it is just lying dormant somewhere! eroding due to inflation even!

it's not the stoneage or the 1800's even. Why do the assets have to be cashed out of investments and transferred over rather than just a notice to the state:

Here's a list of people who haven't logged in? List it on the state site or whatever. To do whatever they suppose transferring to the state is accomplishing. It's not like the state is doing any with it - to notify or find people or manage the money or whatever.

everything is electronic, there is no reason for these draconian measures. All these silly privacy policy you get notified about all the time, andthe account managthey can't verify you remain in existance if you don't log in?

Seems very antiquated to me.

Still seems like misplaced outrage indeed. Learn a valuable lesson, share it with your friend a few more people here, and move on. If the person who owned the account managed it irresponsibly (and it sounds like they did) there is no cause for vitriol toward Vanguard. BTW, this happens with banks, insurance companies, unclaimed deposits, refunds and more. One should check the unclaimed property sites once a year.

[mistymoney]

… they had a letter, but didn't followup.....

This is the sort of line that belongs in the first post.

Your “someone” will have pay a little tuition for this life lesson.

I didn't know the whole story at the start, I had never heard of this so I was thinking some kind of scam.......so checking in with you lot for more info and lucky I did before telling them it was a scam.....since apparently.....it was not.

[mistymoney]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Yeah, I’m not really seeing the outrage here. It sounds like vanguard made attempts to notify the owner or the dormant account after years of inactivity. I get being frustrated at having to track down “their” money, but I’m unclear how you think vanguard should have handled this differently.

the outrage is that you think it is invested and then it is just lying dormant somewhere! eroding due to inflation even!

it's not the stoneage or the 1800's even. Why do the assets have to be cashed out of investments and transferred over rather than just a notice to the state:

Here's a list of people who haven't logged in? List it on the state site or whatever. To do whatever they suppose transferring to the state is accomplishing. It's not like the state is doing any with it - to notify or find people or manage the money or whatever.

everything is electronic, there is no reason for these draconian measures. All these silly privacy policy you get notified about all the time, and they can't verify you remain in existance if you don't log in?

Seems very antiquated to me.

I mean, I kinda see why you'd be annoyed, but the solution seems well established, nearly effortless and extremely accessible.  Just spend 5 minutes checking up on accounts once every 18 months, and/or respond to mailers. Why create an additional registry (which itself is a doorway to fraud)? What will that do which the current system does not?

How would saying: X has flagged account at vanguard produce more fraud than saying X's old vanguard funds held by the state, click here to claim?

[mistymoney]

seems like I remember hearing about an old modest account someone's grandfather had and it was 'lost' for like 100 years and was evenutally found the heirs and it was a lot of money. Maybe in england?

I guess that wouldn't happen today. Can you actually get paper stock certificates anymore? Remember blast from the past? they were rich on the old stock certificates, but if they'd had an account, would have all been cashed in and worth a couple thousand at best....

[dividendman]

I think it makes sense if the balance was very low. But if the balance is large it's bullshit.

The entire purpose of an asset management company is to... you guessed it! Manage your assets!

Imagine this person bought 30 year treasuries. Isn't it reasonable to wait at least 30 years before closing the account?

This stuff seems like total bullshit to me. It costs Vanguard (or whomever) very little to keep the account open. It probably costs them more to do whatever procedure is needed to send it to unclaimed property.

I wonder if treasury direct does this.

[Dicey]

I suspect most of this situation was created by the Feds and state governments that want their cut. I would bet that VG is just following the rules. I am also sure these rules were spelled out in the fine print when the account was opened.

[iluvzbeach]

Yeah, there are definitely laws that require this. The financial entities would not be doing this on their own accord. My first career was in banking and this process was always a major undertaking every year. Between the expense of mailings, overhead for managing phone calls, internal processes for tracking & recording, etc., it is expensive for FIs to manage. However, without it, there wouldn’t be an easy way to find out if you had unclaimed property, short of reaching out to every business you’ve ever done business with.

[bacchi]

However, without it, there wouldn’t be an easy way to find out if you had unclaimed property, short of reaching out to every business you’ve ever done business with.

Yep. As the future executor of my parent's will, I'm glad that the state will recover money years later that wasn't tracked in my parents' manila "Finances" folder. This is even more valuable as they get older and more forgetful.

[dividendman]

I get that there are laws in place, I'm just saying they're stupid.

If I open a brokerage account and buy a 5 year bond I need to "check up" on the bond every year or so or it goes to the state and stops accruing interest? That's crazy.

If the state actually took possession of the asset instead of it being liquidated that would be more reasonable but still dumb.

[NotJen]

Timely, I just read a policy update from one of my banks, which contained info about keeping the account active.

It oh-so-helpfully says "a period of time" without any specifics, though.  At least they won't consider my long-term CD abandoned until it matures and I fail to do anything with it.

Keeping Your Accounts Active: We are required to send the balance of any abandoned or unclaimed account to the state of your last known primary address. Your account may be considered abandoned if you do not conduct activity within a period of time based on applicable law. Account activity can include:
• Depositing or withdrawing funds (may exclude preauthorized and automatic deposits or withdrawals);
• Updating your address;
• Accessing your account with Online Bank, the [name of acct] App or other means that we may make available to you; or
• Contacting us concerning your account.

In general, a CD Account that has not reached its first maturity date will not be considered abandoned.
However, the CD Account may be considered abandoned if you do not contact us or conduct activity upon automatic renewal.

[Paul der Krake]

There is one very simple solution instead of logging in every quarter, which is to open the correspondence addressed to you.

May this serve as an adulting lesson to OP's friend, who is 100% in the wrong here.

[MoseyingAlong]

everything is electronic, there is no reason for these draconian measures. All these silly privacy policy you get notified about all the time, and they can't verify you remain in existance if you don't log in?

They did try to verify your friend was still alive. That was the point of sending the letter they ignored.

This is not Vanguard on a weird power trip, it is required by law.

If you want to know more, from the SEC website,

What is Escheatment?

The term escheatment refers to the process of turning custody of abandoned assets or accounts over to a state authority. Investment accounts that are held with a broker-dealer or investment adviser may be subject to escheatment under certain circumstances described below. 

States generally require financial institutions to escheat, or turn over to the state, any investment accounts that have been “abandoned” for a specified number of years. All states also require financial institutions to attempt to notify an account holder before turning an abandoned account over to the state. The rules for determining when an account qualifies as “abandoned” and for what qualifies as an attempt to contact an account holder vary for each state. For more information on the escheatment rules that apply in your state you can check out the National Association of Unclaimed Property Administrator’s (NAUPA) website for links to each state’s rules for abandoned property.

What happens to the contents of escheated investment accounts?

States may hold securities or other assets in escheated investment accounts for a limited period of time. However, states will eventually liquidate these assets and keep the money from the sale. For information on how long a particular state may maintain escheated accounts, refer to NAUPA’s website for links to each state’s rules for abandoned property.

[GuitarStv]

There is one very simple solution instead of logging in every quarter, which is to open the correspondence addressed to you.

May this serve as an adulting lesson to OP's friend, who is 100% in the wrong here.

I've spent times of my life where I moved quite regularly.  Getting mail forwarded from one address to another to another often results in lost and missing mail.

In my early 20s I more or less set things up on autopilot and didn't bother logging in to my investment accounts very often.  Hell, I have work related investment accounts that I don't log into more than once or twice every decade right now - I can't take the money out or do much with it so there's no reason to log in more often.

Do either of these make me not an adult and 100% wrong?


Here in Canada we have a publicly available searchable database of unclaimed money (https://www.unclaimedproperties.bankofcanada.ca/app/claim-search) and legally the money has to be held by the government for claims for 30 years if below 1000$ and 100 years if above 1000$.

[Paul der Krake]

There is one very simple solution instead of logging in every quarter, which is to open the correspondence addressed to you.

May this serve as an adulting lesson to OP's friend, who is 100% in the wrong here.

I've spent times of my life where I moved quite regularly.  Getting mail forwarded from one address to another to another often results in lost and missing mail.

In my early 20s I more or less set things up on autopilot and didn't bother logging in to my investment accounts very often.  Hell, I have work related investment accounts that I don't log into more than once or twice every decade right now - I can't take the money out or do much with it so there's no reason to log in more often.

Do either of these make me not an adult and 100% wrong?


Here in Canada we have a publicly available searchable database of unclaimed money (https://www.unclaimedproperties.bankofcanada.ca/app/claim-search) and legally the money has to be held by the government for claims for 30 years if below 1000$ and 100 years if above 1000$.

It's not like vanguard sends one letter and is done. They try calling and emailing too. They use public records to see where you may be living now.

I too have moved a lot, and making sure your mail is forwarded is your responsibility. It's also common courtesy to the next person who isn't interested in getting your mail.

You're allowed to forget to set up mail forwarding, or put a typo in your phone number, or having an overly aggressive spam filter on your email account. If you somehow fall through every single crack, you're either the unluckiest person in the world or an irresponsible adult.

[iris lily]

……
……
……

Iris, running over to login to my .vanguard account……

[mistymoney]

I think it's hilarious that this has turned into a judgemental litany on virtue. Someone didn't log into an account for some years and now they are an irresponsible adult, 100% in the wrong, etc. etc. rather than they weren't able to add to a retirement account and was just living their life being busy, etc.

carry on citizens!

[ATtiny85]

I think it's hilarious that this has turned into a judgemental litany on virtue. Someone didn't log into an account for some years and now they are an irresponsible adult, 100% in the wrong, etc. etc. rather than they weren't able to add to a retirement account and was just living their life being busy, etc.

carry on citizens!

No, no, it was ignoring the notification received that deserves a poke.

[mistymoney]

I think it's hilarious that this has turned into a judgemental litany on virtue. Someone didn't log into an account for some years and now they are an irresponsible adult, 100% in the wrong, etc. etc. rather than they weren't able to add to a retirement account and was just living their life being busy, etc.

carry on citizens!

No, no, it was ignoring the notification received that deserves a poke.

I don't think they ignored it, they moved about a year ago, and my impression was someone was holding mail for them that they recently got a hold of. I think they just opened the letter last night! I don't have all the deals, just some text message, then a pic of the letter, and my immediate reactions was sounds like a scam, and hopped on here for more info.

Because - I didn't know this was a thing at all! I'm only saved from this by checking compulsively, lol!

[Dicey]

I think it's hilarious that this has turned into a judgemental litany on virtue. Someone didn't log into an account for some years and now they are an irresponsible adult, 100% in the wrong, etc. etc. rather than they weren't able to add to a retirement account and was just living their life being busy, etc.

carry on citizens!

I think it's hilarious that you think this has "turned into a judgemental litany on virtue".

[mistymoney]

I think it's hilarious that this has turned into a judgemental litany on virtue. Someone didn't log into an account for some years and now they are an irresponsible adult, 100% in the wrong, etc. etc. rather than they weren't able to add to a retirement account and was just living their life being busy, etc.

carry on citizens!

I think it's hilarious that you think this has "turned into a judgemental litany on virtue".

then everyone is amused......

[reeshau]

How exactly does someone prevent this from happening? What kind of interaction does Vanguard need, and how frequently? I log in every few months to check balances, but that's it. Is that enough to not be dead?

This is my question. People leave jobs when they are younger and don't touch their 401ks for years, because why would they? My spouse has a couple that haven't had activity in years apart from being connected to Mint.

It's just as likely that the former employer goes out of business, gets bought, or changes 401k providers, and your account gets moved into the safe harbor, default Money Market investment option.

There are many reasons to keep track of your investments.  Maybe even more to consolidate and simplify them, and avoid leaving orphans.

How are they supposed to know?  All I can say is, it's not the only personal finance gap, or adult skill gap, in US education.  Take this opportunity to educate a young adult you know.

[geekette]

I had something like this happen with a credit union account.  I'd kept it open with <$50 in it, mostly because "everyone" says credit unions are better than banks and I wanted to remain a member.  I logged in every quarter or so to balance it with Quicken, but never touched it otherwise. 

It took 5 years for them to deem it an "inactive account" and they took out $20 for their trouble (no warning, no mail).  I closed that sucker real quick.

[Cadman]

For those that didn't listen to the podcast, a few notable (and eye-opening) take-aways, including some google gems.

1. The escheatment rules vary not only by state, but by account type & institution. In the case of the OP's friend, it seems a letter was sent, but this isn't always required. Colorado & Indiana, for example, consider an email in lieu of a 1st class letter to be sufficient "due diligence". Hope it didn't end up in your spam folder.

2. The system, which is supposed to protect the little guy, has now turned into another revenue stream for state coffers. Unsurprisingly, dormancy periods have been reduced and there's a push to eliminate the physical letter requirement, citing the increase in postage stamps as justification. (I kid you not). And in the case of searching for unclaimed property, the state databases are intentionally not-linked, despite using the same software and web interface. You have to search each one individually.

3. There's a 'death index' which is exactly what it sounds like. It seems reasonable to me that a dormant account about to be transferred as "unclaimed" should be compared against the database of the deceased, yet that's not a requirement.

4. It's not just investment accounts, it's bank accounts, checking accounts, and safe deposit boxes that fall under these rules, too. If it's under $50 in value, you are not required to be notified when the contents are taken.

[jnw]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Why wouldn't the government prevent them from sending the money since the government knows you aren't dead? Sounds so fishy and scammy to me. I did not know this problem existed.  I guess I'll be logging into all my brokerage/retirement accounts regularly.  I just hope when I get older I dont' get dimentia.. I sure couldn't count on teh state/federal government to be fair, obviously.

[nereo]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Why wouldn't the government prevent them from sending the money since the government knows you aren't dead? Sounds so fishy and scammy to me. I did not know this problem existed.  I guess I'll be logging into all my brokerage/retirement accounts regularly.  I just hope when I get older I dont' get dimentia.. I sure couldn't count on teh state/federal government to be fair, obviously.

A great number of investors want the federal government to know far less about what is in their investment accounts, not more. If one insists the government prevent dormant accounts from being transferred, it’s hard to keep the government from knowing how frequently you contribute or withdraw and how much.

[jnw]

Vanguard has 20 million account holders, dozens of which will die or disappear off the face of the earth in the next hour, because that's what happens when you have lots of customers. If you act dead, they treat you as dead, and turn your stuff over to the government.

It'd be weird if they didn't.

Why wouldn't the government prevent them from sending the money since the government knows you aren't dead? Sounds so fishy and scammy to me. I did not know this problem existed.  I guess I'll be logging into all my brokerage/retirement accounts regularly.  I just hope when I get older I dont' get dimentia.. I sure couldn't count on teh state/federal government to be fair, obviously.

A great number of investors want the federal government to know far less about what is in their investment accounts, not more. If one insists the government prevent dormant accounts from being transferred, it’s hard to keep the government from knowing how frequently you contribute or withdraw and how much.

The government has a social securty death index.  States should be able to access it as well.  They wouldn't have to know about what's in your accounts just tell the brokerage or retirement firm that you aren't dead so the account isn't abaondoned.