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401k Legal Settlement
Old 07-06-2014, 02:43 PM   #1
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401k Legal Settlement

Back in January, 2011, 1 year after retiring I rolled over my 401k to Vanguard from Schwab.

In January I got an email from Schwab saying my 401k statement was available. I assumed it was spam and deleted it, then the next one in April. I received another this weekend so I decided to investigate. The email said do not reply and click here to login to your account, so went to the Schwab site and found the employer 401k login site. It looked just like the site I used to login to when I was working and there was no option to contact them except via phone Mon - Friday or via secure message after logging in.

I decided to click the "forgot password" link and it prompted me for my userid and since I do recall the old userid entered it and it then prompted me with a challenge question which was an unusual question that I was sure was one that I had created so I answered it and got access to my account and set a new password.

Lo and behold there is a balance of over $900 and when I looked at the transaction history I see the account was zero until end of August when a contribution of just over $800 was made, listed as "Legal Settlement", and it has since grown to over $900.

This sort of "bank error in your favor collect $200 and advance to Go" event just doesn't happen to us so it is a very nice surprise, coming on the eve of a big vacation as well. I've googled and seen one or 2 other 401k settlements but not with my former company. I'm not too interested and assume it is probably a class action suit over excessive fees.
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Old 07-06-2014, 02:47 PM   #2
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Congrats!

That's a tidy amount - and should allow you to buy some long pants for your trip.
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Old 07-06-2014, 02:49 PM   #3
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Congrats! A round for your friends is the perfect way to celebrate
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Old 07-06-2014, 02:57 PM   #4
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Nice find!
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Old 07-06-2014, 03:11 PM   #5
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I used to have my IRA with Invesco, many years ago. I transferred it to Vanguard.

About 4 years after the transfer, I get a similar notice via snail mail, except they were not going to re-open the account. I had to get a check cut, and it was tricky because it had to be titled properly to my new Vanguard IRA to avoid tax penalty nonsense. I then sent the check to Vanguard where they handled it without problems.

Well worth all the paperwork it took. It was not chump change either (a few hundred), even though the IRA was relatively small (less than 15k).

This is the only class action in my life that was worth it. Most of them are absolutely useless settlements.
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Old 07-06-2014, 03:35 PM   #6
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When we get back in November I will be over 59.5 so I will just withdraw it and pay the tax rather than go to the hassle of rolling it to my IRA since last time was such a pain in the butt with paperwork and mailed check to me which I then had to mail onto Vanguard. This 401k does not allow any electronic transfers whatsoever (this is not a Schwab thing since last time I did this even the Schwab rep was surprised to see the paper check requirement).
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Old 07-06-2014, 03:37 PM   #7
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I'm waiting for a settlement of sorts in my 401k: my former employer of 6 years sat on 401k elective deferrals for much longer than the spirit of the law allows.

The Department of Labor doesn't have a hard and fast rule on it, but just says they should be deposited into the 401k accounts "as soon as possible, but absolutely no later than the 15th day of the month following when they are deducted"...but even 5-10 business days is considered to be 'late', since these days there isn't really any reason you can't segregate the deferrals in a matter of hours with those newfangled computer devices. And when you say "15th of the month following when they are deducted", it's not crystal clear what date that is if the pay period ends on the end of the month -is the "date withheld" when the check arrives in the employee's hands 3 days after the pay period in the new month, or is it the prior month, when the payroll date was?

When I first started working there, it wasn't crazy out of line - maybe sat on them for 5-10 business days. In about year 3, the deferrals started taking a little longer...like 2-3 weeks after the pay period. In year 4, 2-4 weeks. Then in the last 2 years, it sometimes was as much as 70 days at the absolute worst, but averaged about 35 calendar days to make the deposit!

After asking the company what the issue was (and even sending the HR person a link to the DOL website which clearly states "as soon as the funds can be identified/calculated") but getting nowhere and no changes in deposit speed, I contacted the DOL.

They followed up and told me they finished the audit, and my former employer promised to them to make 401k contributions in a more timely manner. I asked the DOL about the lost earnings payments, and they said that they were calculated and should be made, but I haven't seen any deposits yet into my old 401k account yet.
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Old 07-06-2014, 04:05 PM   #8
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Good that you had the amount received put back into the retirement account. Each year I do a couple of tax returns where the recipient of a class action lawsuit was mailed the check directly and they cashed it, but the underlying fund was in their retirement account. If cashed, it is considered a withdrawal that is taxable and may be subject to early withdrawal penalties.
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Old 07-06-2014, 04:31 PM   #9
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Quote:
Originally Posted by RE2Boys View Post
Good that you had the amount received put back into the retirement account. Each year I do a couple of tax returns where the recipient of a class action lawsuit was mailed the check directly and they cashed it, but the underlying fund was in their retirement account. If cashed, it is considered a withdrawal that is taxable and may be subject to early withdrawal penalties.

Wow, that must be a real bummer.
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Old 07-06-2014, 04:40 PM   #10
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We also received notice of settlement last fall for 2 of DH's old, old 401K accounts. Accounts no longer active so we were sent a check. As DH is over 59.5 and we were planning to do some Roth conversions anyway, we just cashed the check and paid income taxes. That $24K was a very pleasant surprise .
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Old 07-06-2014, 04:48 PM   #11
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Quote:
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We also received notice of settlement last fall for 2 of DH's old, old 401K accounts. Accounts no longer active so we were sent a check. As DH is over 59.5 and we were planning to do some Roth conversions anyway, we just cashed the check and paid income taxes. That $24K was a very pleasant surprise .
$24k must really have been a nice surprise
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Old 07-07-2014, 12:29 AM   #12
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Sheesh that $20 I found hidden in security belt from last vacation doesn't seem so grand anymore! Nice find.
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Old 07-07-2014, 06:10 PM   #13
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At first, we were sure it was a scam of some sort! I get these cards about class action suits periodically, but have always tossed them as you're lucky if you get a few $s. And this one was so old we had nothing in our files.
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Old 07-07-2014, 07:14 PM   #14
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Congrats!

That's a tidy amount - and should allow you to buy some long pants for your trip.
Made me check my suitcase and I HAVE remembered to pack some long pants this time, although I'm hoping not to need them for another couple of months.


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At first, we were sure it was a scam of some sort! I get these cards about class action suits periodically, but have always tossed them as you're lucky if you get a few $s. And this one was so old we had nothing in our files.
Yes, that's why I ignored the first 2 e-mails, I was sure they must be a scam of some sort.
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Old 07-08-2014, 10:33 AM   #15
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Yesterday I told our daughter about this little windfall, and she told us about her huge windfall this last few weeks. Just after she started with her Megacorp they cancelled their DB pension plan so she only had a 401k plan, which is excellent and which she funded to the max for the 8+ years she worked there. They just lost a class action lawsuit and she received a letter saying she would be entitled to a pension based on the full time she worked there and she said it is a substantial annual amount with COLA she can plan on at age 62.
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Old 07-08-2014, 10:50 AM   #16
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I also received a bonus contribution of over $14K last year due to one of the dept of labor settlements as well. I recevied a letter in the mail about it though so it wasn't a surprise.
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