ziggy29
Moderator Emeritus
At the end of 2014, I got a call from Megacorp #1's Retiree Service Center telling me of a mistake they made. I have a small pension with them, actually two pensions based on different job functions I had there over the 12+ years I worked there. One of them was for about 9 months of service and had a cash value of less than $5,000... and they were electing to forcibly cash me out of that plan, which they can legally do when the cash value is under $5K. (They also offered me a lump sum buyout of the larger component, which they can not close out without my approval. At least for now, I declined that offer.)
They said their mistake was actually sending us checks, with taxes withheld, directly payable to us without giving us a chance to rollover to avoid taxes and penalties. They stopped payment on that check and said they'd have more details soon about our options for the distribution.
Well, almost three months passed and I heard nothing. I just thought about it this morning so I called the Service Center back asking for an update. They said they had instead transferred all of the assets for the cashed-out individuals to Citibank to be held so we can open an IRA there. (I didn't know they could do this.) So then I had to call Citi and get the details on what I need to do to set up an actual IRA account and have my balance deposited into it. So then I printed out the application and dealt with hoops to establish identity, mailed it in, and in a few days I should have an account which I can then immediately close and transfer into my Schwab IRA.
Would have been much nice had they just given me the option to receive a check payable to Schwab "for my benefit" which I could just mail into Schwab, but I guess it's better than just sending is a check and dealing with the taxes and penalties.
Has anyone out there ever had something like this happen to them?
They said their mistake was actually sending us checks, with taxes withheld, directly payable to us without giving us a chance to rollover to avoid taxes and penalties. They stopped payment on that check and said they'd have more details soon about our options for the distribution.
Well, almost three months passed and I heard nothing. I just thought about it this morning so I called the Service Center back asking for an update. They said they had instead transferred all of the assets for the cashed-out individuals to Citibank to be held so we can open an IRA there. (I didn't know they could do this.) So then I had to call Citi and get the details on what I need to do to set up an actual IRA account and have my balance deposited into it. So then I printed out the application and dealt with hoops to establish identity, mailed it in, and in a few days I should have an account which I can then immediately close and transfer into my Schwab IRA.
Would have been much nice had they just given me the option to receive a check payable to Schwab "for my benefit" which I could just mail into Schwab, but I guess it's better than just sending is a check and dealing with the taxes and penalties.
Has anyone out there ever had something like this happen to them?
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