On Apr 19, 11:10 am, Mark Bole <ma...@[EMAIL PROTECTED]
> wrote:
> > 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).
It is entirely possible that no "cash out" period was provided in this
circumstance. I am not sure whether the cash out offering is required
or just common-place.
I would hesitate to apply your past experience unilaterally. The
pension protection act and ERISA drastically changed the rules since
"some ten or fifteen years ago". Things are much different now. Your
scenario also didn't involve an M&A, just a plan provider switch
within the same company. In an M&A the actual Trust document changes,
not just the plan provider. New trust documents entail new employee
consent. Lastly, you never "severed your employment" which prevented a
cash-out option. In an M&A, you technically "terminate" with one
company and "hire" at another. That severance (although technical)
allows for distribution.
I've opened numerous IRAs for clients that went through this exact
same scenario, but I've never met one that wasn't allowed to cash-out
during the M&A. That's not to say it's impossible, just that I have
never personally encountered it.
> I can also easily believe that rules for publicly vs. privately held
> companies are different.
Not really. With the exception of Sarb-Ox, which largely focused on
limiting the powers of highly compensated executives of public
companies, all 401k plans are regulated by the same laws and internal
revenue code. Descrimination testing, blackout periods, matching, safe
harbor regs, etc, etc... are all the same.
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