Join Early Retirement Today
Reply
 
Thread Tools Display Modes
401K shenanigans
Old 04-11-2008, 10:21 AM   #1
Confused about dryer sheets
 
Join Date: Apr 2008
Posts: 4
401K shenanigans

Okay...I work for a megacorp, which recently (1-1-07) changed the administrator of the 401k plan. Rep of new administrator comes to our office and explains plan, and investment options. I asked question about when/how one can take distributions. His answer was, after age 55, and after you are no longer an active employee, you can take periodic distributions as needed, without paying the 10% penalty, but you still have to pay the taxes, and we can set up an automatic system for you.
(401k rules allow this, but not IRA rules.)

Now that I'm ready, I find that megacorp has changed the rule, (without telling anyone) and will only make a lump sum payment. (all or nothing)


That only leaves the option of rolling over to an IRA, and having to set up a 72T, or pay the penalty, which is not really an option.

I feel like megacorp has deceived it's employees....(again)

How can they change critical rules such as this without notifying affected employees? It just seems so underhanded to me. Should I contact an attorney?

any thoughts? or suggestions?
DavidG is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-11-2008, 12:21 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 13,202
I would guess that the advantages of picking whichever investments you want in an IRA (over the limited choices of their 401K) would outweigh the burden of the rollover process and setting up a 72T.

Did you ever see this option in writing, or are you only going with what the rep showed you?

Most likely their only requirement is to document the current plan. It would be nice if they notified you of changes, but I don't know that this is required. I just browsed my plan, it says it can be changed or cancelled at anytime, and my only guarantee is that I don't lose my money, and that I become 100% vested at that time.
RunningBum is offline   Reply With Quote
Old 04-11-2008, 12:22 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,309
My thought would be to attempt to set up the automatic distribution with the administrator and maybe Megacorp wouldn't even notice. Why would megacorp care? Administrator would probably prefer to dole the funds out slowly, if at all. It that's not doable, go with 72t.
Did they publish the change in a summary plan description, or just tell you verbally "you can't do that anymore"? I find that frequently noone at megacorp knows the details as well as I do and Administrator (Fidelity) sometimes gives incorrect info until I ask for a '2nd level' rep.
jazz4cash is online now   Reply With Quote
Old 04-11-2008, 02:01 PM   #4
Dryer sheet aficionado
Jeremy's Avatar
 
Join Date: Apr 2008
Posts: 33
I would certainly get a copy of the SPD and see what they say in there regarding distributions. The rep may have quoted the periodic distribution incorrectly to start with, which isn't uncommon. So, I'd do a little more checking, with your employer and the plan provider, as information like this isn't always readily known by people, and some will just make assumptions and tell you whatever they think is the case.
Jeremy is offline   Reply With Quote
Reply

Tags
401k


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Can a company off both 401k and Roth 401k bode316 Young Dreamers 11 01-22-2008 11:40 AM
New Company has no 401K - what to do with old 401k? farmboy42 Young Dreamers 9 08-22-2007 08:19 PM
Roth 401k vs Traditional 401k keldon FIRE and Money 3 01-08-2007 12:25 PM
Trad 401k or Roth 401k for High Earners Linney Young Dreamers 7 01-01-2007 07:24 PM
Traditional 401k or Roth 401k HatePayingTaxes Young Dreamers 4 12-30-2006 09:59 PM

» Quick Links

 
All times are GMT -6. The time now is 07:06 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.