Can a 401k Plan/Plan Administrator restrict rollovers to certain types
of IRA accounts? Specifically, when an employee is terminated and
wants to take a full distribution/rollover to an IRA and close their
existing 401k account, can the Plan/Plan Administrator say they will
only allow direct rollovers to Traditional IRAs and not to Roth IRAs,
even though rollovers to Roth IRAs became allowable by law on January
1, 2008? Does the Plan/Plan Administrator have that authority? Is
there anything I can do to fight it? Yes, I know I can go ahead and
roll the thing into a Traditional IRA and then subsequently convert it
to a Roth IRA but that is the whole POINT of the new law: to prevent
those additional steps. Can my 401k Plan Administrator just say
(basically), "We don't feel like implementing new procedures or
updating our system, so we're just not going to allow it right now
because we can't produce the proper tax forms". The law has been in
place for 3 1/2 months, they knew that it was coming for a looooong
time before that, but they just didn't get their act together. Very,
very frustrating.
It gets worse. Not only that, they want to top it all off with a $40
account closing/servicing fee. I almost died. They want $40 out of
*MY* retirement when they can't even do what I asked?!? Is that
legal? Is there anything I can do to fight *THAT*??
I got lucky enough with a Google search to get the Plan
Administrator's telephone number and email address (very big company -
ADP - didn't think I would get so lucky). I called her up. She was
familiar with the new law but not with the requirements of the Plan to
which she is the Administrator(!). She thought that the Plan spells
out which types of rollovers are permitted and which are not but she
would have to look at the Plan documents to see and call me back. I
told her my copy of the Plan Summary does not address these types of
rollovers because it was written prior to 2008 and asked her to please
send me an updated copy if there is one that addresses this new law.
I followed up my phone call with an email to her recapping our
conversation and thanking her for her time/help. It will be
interesting to see if I ever hear from her again. And if I do, it
will be interesting to see what she says.
Can you offer any advice or help?
Thanks!
Heather
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