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Subject:  Re: 401(k) handling Date:  1/19/1998  12:31 AM
Author:  bacon Number:  1374 of 88513

<A good friend got laid off from a job at about the time the boss sent all of the employee 401(k) funds to be
managed by a money manager who was a friend of his. My friend wanted to manage her money herself,
perhaps by converting to an IRA, but he said she could not do that -- her funds had to go with all of the other
funds to be managed by his friend the money manager. We were skeptical at the time and we remain
skeptical, but we know next to nothing about this. We wonder if anybody knows if she can take control of her
funds and move them to an IRA account with something like VG Index 500, under her control from then on,
from a collection of load funds they were put into. We realize that she has already paid commissions through
the loads and may have to pay more, but it is the concept we are asking about. What rules govern this sort of
thing, and where do we find them? Thanks for any help.>

This is extremely dubious. If your friend is no longer employed by that company--voluntarily or otherwise--they are legally obligated to give up the money upon her demand. There simply is no other legal option to the company. And if she demands (by doing the requisite paperwork with an IRA trustee, for instance, who will then forward required paperwork to the company in question) a direct transfer of her money (which is far preferable to a rollover through her hands of the money), then they must do that--they can not even send her the money directly.

Your friend should do a number of things, in this general order: find out the name of the head of her state's Department of Labor; find out who in the SEC handles such problems (see the Consumer Information Center at for an excellent booklet that gives addresses and phone numbers for all this kind of thing); talk (and write a letter saying the same thing) to her company once more, and invite them to explain their attitude to <name of Dept Labor> and to <name at SEC>. She should be prepared to write to both <name>s if she doesn't get _immediate_ acquiscence on their giving up her money, and she should be prepared to write to <names> if the money doesn't actually get transferred promptly, even if they acquiesce.

This is not simply ignorance on the part of a Plan Administrator; this is fraud, and it shouldn't be tolerated for a minute.

Hope this helps.

Eric Hines

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