kastnna wrote:
[...]
> Sandra hit on something that sounded fishy to me also. When changing
> qualified plans (new company or not) the IRS requires a blackout
> period of not less than 30 days. During this time, no changes can be
> made to the accounts (you don't want a bunch of action occurring in
> the accounts at the same time they are changing custodians). Plan
> participants must be notified in wiriting before said period and are
> often allowed to request a distribution at that time.
>
> Contrary to some of the statements here, an employer cannot transfer
> your assets independent of your wishes. When you enrolled in the 401k
> you enrolled with a specific provider, under a specific set of T&Cs,
> and with a specific set of investments. That can't typically be
> changed without your approval.
Everything except your last statement sounds about right to me. Some
ten or fifteen years ago, a Fortune 500 company I worked for decided to
move 401k custodian****p from State Street Bank to Fidelity. There was a
lockout period as you describe, but we did not have a choice to take a
distribution. Of course, we could have converted all investments to
cash-equivalents prior to the switch, but we had no choice about losing
specific investment choices available under the former custodian, and
absent any action on the part of employees, specific funds were
automatically mapped to similar funds under the new plan. (To the best
of my recollection -- I no longer have the detailed paperwork).
I can also easily believe that rules for publicly vs. privately held
companies are different.
This is one of the drawbacks of leaving money in a 401k with a former
employer. Rolling over to an IRA removes these restrictions, plus
enables better tax treatment of pre-retirement withdrawals for
first-home purchase, education, and a few others.
This is also one of the reasons why employer-matching contributions in a
401k should not be considered as constructively-received compensation --
you don't really have full control over it until you leave the company
(or reach retirement age).
-Mark Bole
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