ER and 401k distributions before 59 1/2

[rodi]

Quote:

Originally Posted by BBQ-Nut I have contacted our Plan Provider thru our Benefits Center - that is the only avenue of communication I know of. The actual assets under management is Hewitt - which is surprisingly not US but UK...so they must have a US branch - but their website makes my head explode. I did reply back to the Benefits Center with the quoted excerpt from Pub 575 and the link to the IRS page - I have not heard back in the promised 24hr response time for inquiries - so I may have made their head explode! (ah - Karmic balance). I've looked into the 72t approach - that may be my ticket.

My experience with Hewitt - at my previous corporate overlord (my division was sold off last year - so no longer dealing with Hewitt)... They were only the provider of the user interface for the 401(k) - they did NOT manage the assets. In our case - Northern Trust was the actual plan provider.

Doesn't matter, since the 401k SPD was written by megacorp (not Hewitt or Northern Trust.)

The SPD is your guiding document.

It can be tricky getting the info you need. My newest corporate overlord was very small before acquiring my division. The HR department is less than knowledgeable and seems surprised by many of the questions asked at the time of acquisition. The 401k plan has many people involved in managing it: The Hartford, Mass Mutual, and many of the funds are Wells Fargo (but not all). It can be challenging to find the right person to contact with questions. It was challenging to deal with getting the overages above the federal limit refunded, because we were forced to change 401k plans mid year. When we were asking about the "true ups" - (which are mentioned in the SPD) - HR was initially clueless.

All of that is a fancy way of saying - I doubt Hewitt is actually responsible for the assets under management - they're just another layer (of possible ignorance or misinformation) between you and your money.

[BBQ-Nut]

Well - I got my follow up reply and I got an apology from the Benefits Center for giving out wrong information!

Turns out I can withdraw w/o penalty from the Plan if I separate from service after 55 and before 59 1/2.

Which is good - I don't have to cook numbers with IRA Rollovers and the 72t calculations. It would have worked that way as well but more complicated.

So - back to my original plan.

I've saved their response for 'future reference'.

[martyb]

Quote:

Originally Posted by rodi My experience with Hewitt - at my previous corporate overlord (my division was sold off last year - so no longer dealing with Hewitt)... They were only the provider of the user interface for the 401(k) - they did NOT manage the assets. In our case - Northern Trust was the actual plan provider. Doesn't matter, since the 401k SPD was written by megacorp (not Hewitt or Northern Trust.) The SPD is your guiding document. It can be tricky getting the info you need. My newest corporate overlord was very small before acquiring my division. The HR department is less than knowledgeable and seems surprised by many of the questions asked at the time of acquisition. The 401k plan has many people involved in managing it: The Hartford, Mass Mutual, and many of the funds are Wells Fargo (but not all). It can be challenging to find the right person to contact with questions. It was challenging to deal with getting the overages above the federal limit refunded, because we were forced to change 401k plans mid year. When we were asking about the "true ups" - (which are mentioned in the SPD) - HR was initially clueless. All of that is a fancy way of saying - I doubt Hewitt is actually responsible for the assets under management - they're just another layer (of possible ignorance or misinformation) between you and your money.

This is pretty much the scenario with my wife's employer & their HR/benefits "expert".

[MRG]

Quote:

Originally Posted by BBQ-Nut Well - I got my follow up reply and I got an apology from the Benefits Center for giving out wrong information! Turns out I can withdraw w/o penalty from the Plan if I separate from service after 55 and before 59 1/2. Which is good - I don't have to cook numbers with IRA Rollovers and the 72t calculations. It would have worked that way as well but more complicated. So - back to my original plan. I've saved their response for 'future reference'.

Congratulations for having the persistence to get the correct answer. Many that follow you will benefit!
MRG

[plsprius]

I have been researching this issue, too. My plan is managed by Fidelity, and I was able to find the explanation below, in our documents.

Something like this is what you are looking for:

If I don’t do a rollover, will I have to pay the 10% additional income tax on early distributions?

This tax is in addition to the regular income tax on the payment not rolled over.
The 10% additional income tax does not apply to the following payments from the Plan:

·

Payments made after you separate from service if you will be at least age 55 in the year of the separation

·

Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or life expectancy (or the lives or joint life expectancy of you and your beneficiary)

[FIREd]

Quote:

Originally Posted by BBQ-Nut Well - I got my follow up reply and I got an apology from the Benefits Center for giving out wrong information! Turns out I can withdraw w/o penalty from the Plan if I separate from service after 55 and before 59 1/2. Which is good - I don't have to cook numbers with IRA Rollovers and the 72t calculations. It would have worked that way as well but more complicated. So - back to my original plan. I've saved their response for 'future reference'.

Excellent! Your perseverance paid off.

[pb4uski]

Quote:

Originally Posted by BBQ-Nut Well - I got my follow up reply and I got an apology from the Benefits Center for giving out wrong information! Turns out I can withdraw w/o penalty from the Plan if I separate from service after 55 and before 59 1/2. Which is good - I don't have to cook numbers with IRA Rollovers and the 72t calculations. It would have worked that way as well but more complicated. So - back to my original plan. I've saved their response for 'future reference'.

Excellent!!! in retrospect, do the think the wrong answers you were previously given were due to the way you asked the question or that they just gave you the wrong answer? If the latter, it may be worthwhile to point it out to those running the Benefits Center so they can improve their CSR training so others can avoid what you had to go through.

[ggbutcher]

I just looked up my plan description, and they only withhold the 20% for taxes. They say I could be liable for the 10% penalty for most withdrawals before 59 1/2, but I'm the one who has to pay it.

The IRS website says:

Exceptions. The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances:
...

• 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.

So, it would seem to me that a plan may elect to withhold an amount equal to the penalty, but you will get it back when you file, if you meet the criterion... ??

[BBQ-Nut]

Quote:

Originally Posted by pb4uski Excellent!!! in retrospect, do the think the wrong answers you were previously given were due to the way you asked the question or that they just gave you the wrong answer? If the latter, it may be worthwhile to point it out to those running the Benefits Center so they can improve their CSR training so others can avoid what you had to go through.

Well, I looked at what I wrote and was pretty explicit in asking if withdrawals were permitted w/o penalty after I turned 55, was still employed at that time, then 'separated service'.

I'll follow up with a thank you and your suggestion.

Thanks!

[greyhat]

Quick question: what type of plan is your "401k"? I ask because the term 401k is used often but not all employer sponsored retirement plans are 401ks. Furthermore not all employer sponsored retirement plans are actually qualified.


Sent from my iPhone using Tapatalk

[BBQ-Nut]

Not sure I understand the question.

All the statements I get and on-line plan information indicate that my plan is a '401k'.

[pb4uski]

Seems confused about dryer sheets and 401ks