401K rollover - how long can employer take?

[teller80]

My husband was downsized back in January, and a couple weeks later he submitted paperwork to rollover his 401K into an IRA. His former employer hasn't sent us the money yet, does anybody know how long this typically takes? Is there a time limit? I looked at the summary plan description but I didn't see anything about this. thank you!

 

[cluvsdisney]

I don't know if there are laws or regulations regarding rollovers but it can be completed pretty quickly. has he followed up with the former employer or the plan administrator? It's possible the paperwork wasn't received.

 

[tvguy]

Searching it seems 2 to 3 weeks is the norm. You should check with the Financial Firm that manages the 401k to see where the rollover is in the process. There is no advantage to an employer preventing a rollover, they can never access your money, and by getting you out of the plan they don't have to pay the administrator fees to manage it.

 

[sonnyjane]

Also confirm with the paperwork that they are sending you a check. Mine directly rolled it over into the new account - no check.

 

[teller80]

has he followed up with the former employer or the plan administrator? It's possible the paperwork wasn't received.

He contacted the plan adm, they said the former employer was holding it up. He doesn't really want to contact them, the downsizing was not pretty (you find out who your real work friends are). PS - it all worked out for the best in the end, yay.

Searching it seems 2 to 3 weeks is the norm. You should check with the Financial Firm that manages the 401k to see where the rollover is in the process. There is no advantage to an employer preventing a rollover, they can never access your money, and by getting you out of the plan they don't have to pay the administrator fees to manage it.

Thats what I thought too, but its been six or seven. Do you know if there are regulations for a maximum time the company has to distribute the money? I thought his time frame to submit was 30 days, that led me to believe the company should also have guidelines.

Also confirm with the paperwork that they are sending you a check. Mine directly rolled it over into the new account - no check.

Thank you, I'll tell him to contact Fidelity (where the money will go when we get it.)

 

[Sadie22]

It would be best to have the funds directly rolled over to Fidelity without them coming to your husband first. Fidelity can handle this for him with the proper paperwork which they will provide to him. There is a period of time from when the 401(k) funds are liquidated to when they need to be in the IRA. If a check was issued to your husband and for some reason he did not receive it and thus the funds did not go into the IRA quickly enough, there would be tax due, a situation which is avoided with direct rollovers.

 

[tvguy]

He contacted the plan adm, they said the former employer was holding it up. He doesn't really want to contact them, the downsizing was not pretty (you find out who your real work friends are). PS - it all worked out for the best in the end, yay.



Thats what I thought too, but its been six or seven. Do you know if there are regulations for a maximum time the company has to distribute the money? I thought his time frame to submit was 30 days, that led me to believe the company should also have guidelines.




Thank you, I'll tell him to contact Fidelity (where the money will go when we get it.)

I can't find any rules on how long they have to process a transfer, but like I said, it is to the employers financial benefit to get you out of their plan as possible.

 

[Arielle22]

I handle my company's 401k. Someone at the company usually has to sign off the withdrawal forms. So if the company is holding up the process, it is in your husband's best interests to call the HR department and see where it stands. I agree with TVGuy that most HR people are happy to have funds moved. Not only does it cut down on fees but it is less people that you have to provide info about during audits and yearly reporting.

 

[Pakey]

I'm the Plan Trustee for our corporate 401(k) and our disbursements are done at the beginning of each quarter. So for someone who termed in January, distributions would be done early April. Once I submit paperwork, it's approximately 10 working days for check distribution. There are no laws that mandate a timeframe for distributions. I set ours for the beginning of each quarter to make it easier for our Third Party Administrator (independent company that does the Plan recordkeeping). The only time withdrawals are processed quicker than this is when it's due to a death or disability.

 

[TAX GUY]

It would be best to have the funds directly rolled over to Fidelity without them coming to your husband first. Fidelity can handle this for him with the proper paperwork which they will provide to him. There is a period of time from when the 401(k) funds are liquidated to when they need to be in the IRA. If a check was issued to your husband and for some reason he did not receive it and thus the funds did not go into the IRA quickly enough, there would be tax due, a situation which is avoided with direct rollovers.

This! New rules only allow you to do ONE rollover per 365 days (if rolling it over yourself. You can do unlimited if its trustee to trustee). Also keep in mind if its disbursed directly to you, they MAY withhold federal and/or state taxes. If they do that, you are still on the hook for the entire gross amount to be rolled over. If you don't, the taxes withheld will be deemed a distribution and taxable the following year (plus possible early distribution penalty). Best to have it a direct rollover.

 

[GaryDis]

New rules only allow you to do ONE rollover per 365 days (if rolling it over yourself. You can do unlimited if its trustee to trustee)

Are you sure that applies to 401ks? I know it applies to IRAs, but often taking a distribution from a 401k is out of your control. Some companies will forcibly distribute the 401k assets if you leave the company, and while they should give a trustee-to-trustee option, the paperwork isn't always timely. Though it would be rare for someone to leave two jobs within the same tax year.

Of course, the withheld tax remains an issue regardless.