Left Employer, 401k Questions r.e. Contributions & Rollover

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Left Employer, 401k Questions r.e. Contributions & Rollover

Postby Oilburner » Sat Mar 23, 2013 10:40 am

Yesterday was my last day with my employer of 10 years. I contributed the maximum to the company 401k. I was paid on the 1st and 15th of every month. About three days after the 15th, the employer added my 401k contribution and the (small) employer match to my 401k for the most recent pay period. I was paid on March 15th and received a full pay for the 1st through the 15th (all of it went to pay taxes and was funneled to my 401k because during that pay period I accepted a job offer with another company, but have a 6 month waiting period to participate in their company 401k, so I upped my 401k contribution to 95% of my salary to get as close to the maximum contribution allowed for the year).

At the end of the month I should receive pay for the five days I worked during the 03/16 to 03/31 pay period (the 18th through the 22nd).

Question: Will this last pay go to fund my 401k with the now ex employer? I thought it would, but when I look at my 401k account online, for "future" contributions I read, "This view shows how your money will be invested the next time you or your employer makes a contribution, Pretax: 0%, Catch-up: 0%, Employer Match: 0% (the previous day my pretax and catch-up contributions were set to 75% and 20% of salary, respectively and I did not change them).

What the above is telling me is because I am no longer employed, the employer is disallowing further contributions to my plan, even though it is from money earned while I was employed and a plan participant. Is this the case? Is it legal?

Also, there is a prominent note after I log-on to my 401k account that reads, "You are no longer employed by [Company Name]. You may leave your money in this plan or withdraw your money by rolling it into an IRA [hyper-linked "IRA" to the payroll processor's investment site], rolling it into another employer's plan, or distributing it, payable to you [hyperlink to 'Rollovers & Withdrawals"].

I never requested a rollover or withdrawal from this plan, but it looks like one was requested and is in process. (I wanted to wait until about the 5th of next month to allow a deposit (if any) to be made to my 401k for the work I performed during my last week on the job (which was in the current pay period) and then roll it over to Vanguard). But under "Rollover Status & History" the following is listed under "Rollover or Withdrawal", "Distribution package scheduled to be sent on 03/25/2013" and under "Status" it says, "Mailed". The next item on the tracking list is "Payment sent Confirmation #", but those are blank.

Is there reason to be concerned about this? Or is it standard practice for 401k distribution packages to automatically be sent when employees resign? I thought I had to initiate the process. If this helps any, my former manager stated during my next to last day on the job that the investment broker for the plan was going to contact me to assist me, "Since I know you want to get your money out as soon as you can" (he knows I was not happy with the company 401k (high) plan fees). I figured the broker would contact me, but to attempt to get me to leave the money in the plan or move it to investments he brokers. The broker never contacted me.

Is there any reason to be concerned about the above? Should I simply contact Vanguard to initiate a pull for the rollover?

Thanks.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby pkcrafter » Sat Mar 23, 2013 12:51 pm

Comments below...

Oilburner wrote:Yesterday was my last day with my employer of 10 years. I contributed the maximum to the company 401k. I was paid on the 1st and 15th of every month. About three days after the 15th, the employer added my 401k contribution and the (small) employer match to my 401k for the most recent pay period. I was paid on March 15th and received a full pay for the 1st through the 15th (all of it went to pay taxes and was funneled to my 401k because during that pay period I accepted a job offer with another company, but have a 6 month waiting period to participate in their company 401k, so I upped my 401k contribution to 95% of my salary to get as close to the maximum contribution allowed for the year).

At the end of the month I should receive pay for the five days I worked during the 03/16 to 03/31 pay period (the 18th through the 22nd).

Question: Will this last pay go to fund my 401k with the now ex employer? I thought it would, but when I look at my 401k account online, for "future" contributions I read, "This view shows how your money will be invested the next time you or your employer makes a contribution, Pretax: 0%, Catch-up: 0%, Employer Match: 0% (the previous day my pretax and catch-up contributions were set to 75% and 20% of salary, respectively and I did not change them).

It looks like you didn't get to make a contribution. Your final check should reflect the fact that nothing was withheld for a 401k contribution.

What the above is telling me is because I am no longer employed, the employer is disallowing further contributions to my plan, even though it is from money earned while I was employed and a plan participant. Is this the case? Is it legal?

Yes, it's legal.

Also, there is a prominent note after I log-on to my 401k account that reads, "You are no longer employed by [Company Name]. You may leave your money in this plan or withdraw your money by rolling it into an IRA [hyper-linked "IRA" to the payroll processor's investment site], rolling it into another employer's plan, or distributing it, payable to you [hyperlink to 'Rollovers & Withdrawals"].

These are standard options.

I never requested a rollover or withdrawal from this plan, but it looks like one was requested and is in process. (I wanted to wait until about the 5th of next month to allow a deposit (if any) to be made to my 401k for the work I performed during my last week on the job (which was in the current pay period) and then roll it over to Vanguard). But under "Rollover Status & History" the following is listed under "Rollover or Withdrawal", "Distribution package scheduled to be sent on 03/25/2013" and under "Status" it says, "Mailed". The next item on the tracking list is "Payment sent Confirmation #", but those are blank.

I would call the company first thing Monday and see what and why something was done.

Is there reason to be concerned about this? Or is it standard practice for 401k distribution packages to automatically be sent when employees resign? I thought I had to initiate the process. If this helps any, my former manager stated during my next to last day on the job that the investment broker for the plan was going to contact me to assist me, "Since I know you want to get your money out as soon as you can" (he knows I was not happy with the company 401k (high) plan fees). I figured the broker would contact me, but to attempt to get me to leave the money in the plan or move it to investments he brokers. The broker never contacted me.

Yes, there is some concern, and the money should not have been sent without some sort of submitted written request by you. So, the first thing to do is find out if some action was actually taken and what it was, such as a full withdrawal. Ask why it was done without you requesting it.

Is there any reason to be concerned about the above? Should I simply contact Vanguard to initiate a pull for the rollover?

There are some concerns, but first find out if something was actually done. Then post again in this thread and we can provide some guidance on how to handle it.

Paul


Thanks.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sat Mar 23, 2013 1:52 pm

I wonder if you are reading the distribution thing wrong. I'm thinking the "distribution package" might be a written explanation of your choices and copies of the forms you might need. It is likely to be from the 401k provider, hoping to capture your money before you get smart and send it to another custodian.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Sat Mar 23, 2013 2:49 pm

Thank you both for replying. Before I posted my question I thought it could be either possibility you both mention. I just was not sure which one! I'll call the payroll processing/401k record keeping company first thing Monday morning and ask them to explain. Legally, I don't see how a distribution could be made without my signature. But then again, they could have mistakenly made a distribution. This would not be the first time the payroll processor/401k record keeping company made a mistake with my money (once they issued an actual (pay) check. Since I had direct deposit I did not open the envelope containing my pay stub for a few days. I noticed that my checking account was overdrawn and that I had not gotten paid through my normal direct deposit when I checked by bank account online. I opened the pay stub envelope and it contained an actual check and not the "nonnegotiable" pay stub. The payroll company could not explain why they sent me a check and they paid the NSF charges I incurred. Lesson learned: When received, always open your pay stub envelope and look at what is inside.)
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby cherijoh » Sat Mar 23, 2013 3:30 pm

Plans can make a distribution automatically, but it must be below a certain dollar threshhold. I'm not sure if this is an IRS limit or just whatever the plan specifies. According to the plan documents for my plan, after you quit they send you a package of information about distribution options. However, if your plan balance is $1000 or less, they automatically send you a check. Otherwise, they wait for you to decide what you want to do. If distributions haven't been made by the time you hit 70 1/2 then the IRS-mandated RMDs come into play.

If you have maxed out your contributions for 10 years, you would have to fall into the balance range where you get to decide what to do. Therefore I think they are telling you they sent you all the paperwork they are required to distribute.

C
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Sat Mar 23, 2013 4:41 pm

I have about $300,000 in the Plan. It's about half the company Plan balance. I would think they would try do everything they could to convince me to keep it in there. I'd be surprised if they did not. I am paying a 1.68 % ER for a Vanguard Target Date Retirement Fund in this plan. The entire balance is in this fund. Exact same fund as the 0.18 ER Vanguard Target Date Retirement fund. Of the 1.68% ER, 1.5% of fund assets is deducted from my account each year in the form of an insurance company "wrap" fee. The funds in the the company 401k Plan are "separate sub-accounts" maintained by the insurance company. This information is appears in the insurance company's fund facts sheets The sheets also state the sub-accounts invest exclusively in other fund companies' funds. In my case, a Vanguard Retirement Date Fund. The only difference in the insurance company branded fund is the addition of the wrap fee.

I looked again closely at my account on my soon-to-be ex 401k plan provider's web site and I saw this note: "Rollover and Withdrawal Status and History: 1 rollover or withdrawal has been initiated from your account since 03/25/2013." If this is true, I did not initiate it. I'll call them first thing Monday morning to see what is going on. I suppose if the account was closed/distribution made to me, it would not be too bad and I could open a rollover IRA at Vanguard before week's end. I would much prefer a direct rollover, and the check not made out to me, though.

Do company 401k plans charge a fee to process a rollover request? Are these fees limited by law?
Last edited by Oilburner on Sat Mar 23, 2013 5:31 pm, edited 2 times in total.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sat Mar 23, 2013 5:02 pm

Oilburner wrote:I am paying a 1.68 % ER for a Vanguard Target Date Retirement Fund in this plan.

:shock: :shock: :shock:

That last thing you posted would definitely get my attention. I hope you will post on Monday, once you find out what is going on.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby dickenjb » Sat Mar 23, 2013 5:36 pm

Oilburner wrote:I have about $300,000 in the Plan. It's about half the company Plan balance. I would think they would try do everything they could to convince me to keep it in there. I'd be surprised if they did not. I am paying a 1.68 % ER for a Vanguard Target Date Retirement Fund in this plan. The entire balance is in this fund. Exact same fund as the 0.18 ER Vanguard Target Date Retirement fund. Of the 1.68% ER, 1.5% of fund assets is deducted from my account each year in the form of an insurance company "wrap" fee. The funds in the the company 401k Plan are "separate sub-accounts" maintained by the insurance company. This information is appears in the insurance company's fund facts sheets The sheets also state the sub-accounts invest exclusively in other fund companies' funds. In my case, a Vanguard Retirement Date Fund. The only difference in the insurance company branded fund is the addition of the wrap fee.

I looked again closely at my account on my soon-to-be ex 401k plan provider's web site and I saw this note: "Rollover and Withdrawal Status and History: 1 rollover or withdrawal has been initiated from your account since 03/25/2013." If this is true, I did not initiate it. I'll call them first thing Monday morning to see what is going on. I suppose if the account was closed/distribution made to me, it would not be too bad and I could open a rollover IRA at Vanguard before week's end. I would much prefer a direct rollover, and the check not made out to me, though.

Do company 401k plans charge a fee to process a rollover request? Are these fees limited by law?


It would be bad because they would cut you a check for 20% less than your $300K balance and you would have to come up with another $60K within 60 days to complete the rollover or pay tax and 10% penalty on the $60K. Then wait until April of 2014 to get the $60K back in the form of an IRS refund.

Although I suppose you could suppress Fed withholding on your paycheck for the balance of 2013. And you could get a $5K I Bond for sure with your refund.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sat Mar 23, 2013 6:22 pm

dickenjb wrote:It would be bad because they would cut you a check for 20% less than your $300K balance and you would have to come up with another $60K within 60 days to complete the rollover or pay tax and 10% penalty on the $60K. Then wait until April of 2014 to get the $60K back in the form of an IRS refund.

I think this too and what a hassle this would be! Unless you are 59.5 or over in which case there would be no 10% penalty because there would be no early withdrawal.

However, I'm not convinced they have actually started something. I'm hoping the wording is not precise and that it really means paperwork for rollover, not a rollover.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby mah001 » Sat Mar 23, 2013 7:09 pm

The 'smell test' is raising some red flags. Though it's rare for principals of the business to make off with the plan's funds, it has happened. I would contact the custodian ASAP to inform them you haven't requested any rollover or other distribution. If your account balance is half of the whole plan, it suggests a pretty small employer, where messing with the plan is easier. We all hope that's not happening here.

On the other hand, if the employer is interested in preserving the plan's status as 'qualified,' there are multiple issues already possible. To become a disqualified plan, it usually requires failing some part of IRC section 401(a):

401(a)(31) Rollover eligible funds that exceed $200 means you MUST be given the right to choose yea or nay regarding rollover. If this doesn't happen, the plan is potentially disqualified and must make you whole to fix the problem.

While it's possible a plan could be written to put a quick stop to your elective deferrals, that would be unusual. Your election to defer 95% is part of the 'definite written plan.' Failing to follow the written plan is a disqualification issue.

Can't think of any other issues for now.

By the way, last time I checked, balances over $5000 require participant consent for distribution. I think that's in section 411, which links back to 401(a).
If you are at least age 55 by 12/31/13, there's no 10% penalty on distributions from the 401(k). But anything rolled to an IRA reverts to the 59 1/2 rule. See section 72(t).
You said they said 'one rollover since 3/25/13.' I assume that's a typo.
95% deferral and presumably paying at least 7.65% for FICA means you probably should not have received any take home pay.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sat Mar 23, 2013 7:39 pm

mah001 wrote:If you are at least age 55 by 12/31/13, there's no 10% penalty on distributions from the 401(k).

Isn't this only true if the employee retires? This employee is about to start a new job.


You said they said 'one rollover since 3/25/13.' I assume that's a typo.

I keep wondering about this too. There are several things that refer to next Monday as if it has already happened. :?
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Sat Mar 23, 2013 8:06 pm

mah001 wrote "..."If your account balance is half of the whole plan, it suggests a pretty small employer, where messing with the plan is easier. We all hope that's not happening here...You said they said 'one rollover since 3/25/13.' I assume that's a typo. 95% deferral and presumably paying at least 7.65% for FICA means you probably should not have received any take home pay."

There were three employees at the company, now two with my departure. The president, who I've known for 10 years, would not intentionally do anything dishonest. He is one of the most honest people I've known. That is not a concern.

That's no typo. That is exactly how it reads under my account online. I too am perplexed. I know, 03/25/13 has not occurred yet. That's Monday, the first day at my new job.

Thank you for clearing up the issues of me getting a check in my name. That would be very bad, provided I asked for that. I am under 55, so I would have the tax withheld and pay the 10% penalty. My wife just informed me that this happened to her when she initiated a rollover and the old employer screwed up and issued the check in her name. Long story short is the first check was voided by the issuer and a new check issued to Vanguard for the benefit of her since it was their mistake.

I found the distribution documents from the company's 401k plan servicing company's web site and reviewed them. There is no way a distribution could have been initiated without my direction and signature, unless it is a mistake or outright fraud. There is a notice that I need to complete the forms and return within 30 days, otherwise, I was at risk of an "involuntary distribution" (one of the options is "no distribution at this time" so, I guess you are supposed to let them know if you are leaving the money in the plan). All the info I need is there to roll over the 401k to Vanguard and I've already set up the IRA account at Vanguard and selected the (same) fund. The fee, to be deducted by the 401k plan company from my 401k balance, is $65. Reasonable.
Last edited by Oilburner on Sat Mar 23, 2013 9:28 pm, edited 1 time in total.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sat Mar 23, 2013 8:28 pm

Oilburner wrote:I too am perplexed. I know, 03/12/13 has not occurred yet. That's Monday, the first day at my new job.

Speaking of typos...made me laugh!

I think you may have exhausted your brain doing research on this. It is probably nothing. Try to enjoy the rest of your weekend. :D
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sat Mar 23, 2013 8:29 pm

P.S. Are you sure you want to do the rollover to IRA? Have you checked to see how good the next 401k plan is?
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Sat Mar 23, 2013 9:28 pm

retiredjg wrote:
Oilburner wrote:I too am perplexed. I know, 03/12/13 has not occurred yet. That's Monday, the first day at my new job.

Speaking of typos...made me laugh!

I think you may have exhausted your brain doing research on this. It is probably nothing. Try to enjoy the rest of your weekend. :D
Yes, I meant March 25th (I corrected the previous post), I'm tired and I've been looking at this too long. I do appreciate everyone's help, though. This has been a learning experience. This is a great forum.

As for the possibility of rolling the money into my new employer's plan, per their plan rules, I can't participate until after six months of employment. My wife and I have our Roth IRAs and a taxable account and she has a rollover IRA all at Vanguard and we are really happy with Vanguard. I don't think my new employer could match the low fees as well. I also don't want to wait six months, leaving the money in my old employer's very expensive plan.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sat Mar 23, 2013 9:44 pm

Makes sense.

Forget all this for now. Try to have a nice weekend anyway. :D
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby gtwhitegold » Sat Mar 23, 2013 10:00 pm

retiredjg wrote:P.S. Are you sure you want to do the rollover to IRA? Have you checked to see how good the next 401k plan is?


Yes, this is something significant to consider. If there are some institutional class index funds available be it from Vanguard, Schwab, Fidelity, or others that have low ERs, it may be advisable to roll-over to the new 401k. You may still have to keep your funds in an IRA until you are eligible for employee contributions though.

Allen.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Sat Mar 23, 2013 10:46 pm

Thanks, I never considered that. From what I understand you are saying, I could open a rollover IRA at Vanguard and at a later date, when I am eligible to participate in my new employer's 401k and after I research its funds, if I thought the plan was good enough, I could roll over the Vanguard IRA into the new employer plan. I was not aware I could do that. Nice. The first step is still getting the money over to Vanguard.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Default User BR » Sun Mar 24, 2013 11:43 am

retiredjg wrote:
mah001 wrote:If you are at least age 55 by 12/31/13, there's no 10% penalty on distributions from the 401(k).

Isn't this only true if the employee retires?

No, the only stipulation is that the employee was "Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55."

http://www.irs.gov/Retirement-Plans/Plan-Sponsor/401%28k%29-Resource-Guide---Plan-Sponsors---General-Distribution-Rules


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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sun Mar 24, 2013 12:50 pm

Oilburner wrote:I was not aware I could do that. Nice. The first step is still getting the money over to Vanguard.

You can if the plan accepts incoming rollovers. It seems that most do.

An additional reason to consider this is that it clears the way to do back door contributions to Roth IRA. This is a mechanism that allows a person to make indirect contributions to Roth IRA if the person is not eligible for direct contributions to Roth IRA. I don't know if this situation applies to your situation or not.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sun Mar 24, 2013 12:55 pm

Default User BR wrote:No, the only stipulation is....

Thanks Brian. That is what that seems to say.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Default User BR » Sun Mar 24, 2013 2:50 pm

The vast majority of qualified plans will accept a direct rollover from another such plan. Others will also accept rollovers from conduit IRAs (usually titled Rollover IRA by the custodian). Some will accept rollovers from any traditional IRA. You would need to check your new plan's administration. If they don't accept any IRA rollovers, then it might be worth waiting six months.

At the level of this account, the old custodian can't force a distribution unless the plan is ending.


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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Sun Mar 24, 2013 3:14 pm

Even though you can't participate for 6 months, you might be able to find out what the new plan has to offer. That might help you decide if it is worth waiting the 6 months or not.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Sun Mar 24, 2013 4:09 pm

Great advice everyone. Thanks again. I'll do my homework and research the new plan. I am sure I will have access to the information. Perhaps I should wait a couple of weeks prior to initiating the rollover of my old 401k to Vanguard, and research my new employer's plan in the mean time, and then decide if I want to wait and simply roll over the previous employer's 401k into my new company plan.

About the part of my question as to whether or not my employer (or the payroll processing company) can stop my elective deferral for the last pay period I worked (I quit during that pay period, after accruing five days salary, so I will not be a participant on the date the deferral is made (on or about April 3rd)), but the money was earned when I was a plan participant. I did direct the employer to defer this money to my 401k. It appears the employer will not defer any of this money to my 401k, as evidenced when I log onto my 401k account and select "Change Future Investments", there is the following note: "This option is not available to you because you are no longer employed by the company and therefore will not have any future contributions." (Yesterday I could get into "change future allocations", but the allocation amounts for the elective deferral and catch-up deferral were both "0" and I could not change them.) Well I do have future contributions, about $1,500, because during the next to last pay period, I increased my contribution to 95% of my salary (the plan allows up to 96% salary deferral) from the normal deferral of about 25%, since I must wait six months to contribute at the new job. The normal deferral just maxed out my 401k contribution by year's end). For the previous pay period, I did not get any pay since most was diverted to my 401k and the rest paid taxes, as planned.

Here is what the SPD states under "Elective Deferrals", "By completing a Salary Reduction Agreement to make an Elective Deferral to this Plan, your Compensation will be reduced each pay period by an amount equal to a percentage of your compensation from 0% - 96."

This is what the SPD states under "Matching Contributions", "Qualifying Contributing Participant: For any Plan Year that a Matching Contribution is made, you will be entitled to receive Matching Contributions if you contribute Elective Deferrals, and if you terminate employment, you work at least 0 Hour(s) of Service during the Plan Year."

So I think what the above two paragraphs state is that if I am a plan participant and earn money in any pay period and I direct some of that money to be an elective deferral, then it is to be deferred by the employer and I am supposed to get the company match for any period I have an elective deferral, if the employer matches during that period.

Or can the employer stop my elective deferral, even if I earned money during the pay period that a match is made because I was a plan participant during that pay period, but not paid yet, because I quit before the the date the deferral was to be made? Opinions? If is should have had the deferral made, is this something I should pursue with the employer or payroll service?

Thanks again.
Last edited by Oilburner on Sun Mar 24, 2013 4:44 pm, edited 2 times in total.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Sun Mar 24, 2013 4:28 pm

Well, I found the following that indicates the employer is supposed to allow my last pay, earned as a participant, to be deferred, even though I quit before the deferral is made by the payroll company:

"So, if the employer maintaining such a 401(k) plan does not intend to permit a participant to make deferrals from this post-termination regular compensation, the 401(k) plan's definition of compensation must be amended to specifically exclude these payments. Likewise, if the employer intends to permit a participant to make deferrals from post-termination payments of accrued and unused sick, vacation, and other leave or from nonqualified deferred compensation plan benefits paid within the limited timeframe, the 401(k) plan terms will require an amendment to this effect."

http://www.rothgerber.com/showarticle.aspx?show=900

The Plan does not exclude these payments, per the SPD, which is dated 2010. The above took effect in 2008.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby Oilburner » Mon Apr 08, 2013 8:23 pm

Here is an update. I researched my new employer's Plan and although much better than my old (small) company plan (at about half the ER for it's funds), I think I will fare better at Vanguard. I will move the money to Vanguard.

95% of my last paycheck (covering a week of pay) AND my week of unused vacation pay was diverted to my 401k :happy. About a month ago I upped my contribution to 95% (employer allows up to 96%) to make up for the lost ground I will have because I cannot contribute to my new employer's 401k plan for six months. I still will be about $3000 short for the year contributing the max my new employer allows (30% of wages) from September through December.

Immediately following my previous employer's last deposit into my old 401k, I initiated a rollover. That was Thursday and today (Monday evening) the check came to me, made payable to Vanguard Fiduciary Trust Co. FBO and my name. I was stunned that a) my previous employer's plan did not try to get me to keep my 401k in their Plan, or at least ask me to initiate a rollover IRA managed by the payroll company and b) that the payroll processor honored my rollover request very promptly and sent me the check the same day I initiated it. I was expecting a big stall on the funds. The fee was a measly $65 as well.

Tomorrow I will overnight the check to Vanguard. My rollover IRA was set up two weeks ago at Vanguard. My money will have a new home and in the exact same fund that it was in at my previous employer's 401k, but with one BIG difference: the fees will be 1.5% a year less. No matter how the market performs, that equates to $4,500 more per year for me at the current balance.

Truly our government has let us down as far as 401ks are concerned. My money was locked in an expensive employer's 401k plan and the only way I could get it out was by a) dying :shock: , being destitute (take a loan), attaining age 59-1/2, or severing employment. Luckily for me the latter occurred via a change to a better job. It would be nice if employees were free to choose where they put their 401k dollars.
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby retiredjg » Tue Apr 09, 2013 10:26 am

Glad things are moving along!
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Re: Left Employer, 401k Questions r.e. Contributions & Rollo

Postby justplainron » Fri Jul 12, 2013 9:35 am

Back in the early 90's I took a job with small (less than 10 people, including the two owners) & quite young engineering company. The owners were actually college professors, for whom this company was a part-time avocation -- a hobby of sorts, as it turned out. The company had a 401K program, in which I elected to participate. It was fairly conventional and included an employer contribution as a percentage of the total. The professors were the company's sales force, as well as its top management.

The professors were very ego-driven. I'd been there just a bit over a year when they went to a progress meeting, with a client and representatives of some of the other contractors on a very large job. When they returned, they were delighted with how skillfully they had displayed their superior knowledge such that, after a brief while, others in the meeting didn't even attempt to respond to their comments. I groaned (quietly) upon hearing about this, expecting the worst.

And, we got it, 'it' being 'the worst'. The contract was cancelled, along with any further contracting opportunities in that little business sector, which included what had been the company's only prospects.

The two owners remained confident and continued to churn out proposals. That went on for several months but, meanwhile, there was no paying business to keep the company going. The owners maintained that they had the inside track on a couple of outstanding bids, and advised everybody to keep calm. Meanwhile, salaries were discontinued ('temporarily', of course, while awaiting award of some of the pending contracts).

I quit after two months of this, roughly a decade ago. No more contracts ever materialized for the company. I believe that the word got out about the owners' pompous ignorance at that contract progress meeting but, whatever the reason, the company was clearly blacklisted among its former customer base. Subsequently, a few months after I left, the company closed down and vacated its rented office space.

Being at that point just old enough to do so, I cashed out the portion of my 401k that was based on my own contributions, but apparently had not been there long enough to qualify for the employer's contributions. Now here is where it gets interesting.

Every few months, I continue to receive statements from the financial company holding the remaining assets: the employer's contribution from over a decade ago, plus any growth (which is negligible) based on that amount.

The company is still registered with the state (NY), as an operating company at the address it occupied when I worked there. It is listed as such by the NY Department of State, Division of Corporations, which indicated (when I recently checked): "The information contained in this database is current through July 8, 2013", i.e. it is represented as being current. However the company has no presence at the indicated address. The space they occupied at that time (and which they still claim to occupy) is now held by a different and completely unrelated tenant.


1. The company still exists - at least on paper - but its registered corporate address is fraudulent and the company does not actually have a presence or any operations there. Correspondence intended for the company must be sent or forwarded to one of the professors personally, or perhaps to a Post Office box, or it will not be delivered.

2. At the company's former location (and current "Corporate Address"), inquiries about it evoke a blank stare. Nobody ever heard of it. Even the suite number does not exist any more, that suite having been merged with its neighbor to create a larger space for a company that outgrew its original quarters.

3. Also, for some reason that I cannot discern, the company is apparently not able to retrieve its 401k contribution from the financial company hosting the account.

4. Result: stalemate. Neither the former employer nor I can access the money, and apparently the only party pleased with this situation is the "financial management" company hosting the account. They get their piece no matter what, as long as they can hold on to the account, which appears to be: indefinitely.


It's really irksome to see an insurance company getting what appears to be eternal corporate welfare out of my account. It isn't really very much money, but annoying in principle.
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