If the company I'm working for is in financial trouble, can I move my 401k away from the company? The goal is to avoid having the pension become invalid.Thanks,Brett
It depends on the rules of your 401k plan. Usually the answer is no.Your 401k funds are protected by law. They cannot get their hands on them without committing theft.If you are vested in a defined benefit pension plan, plan rules might allow you to roll the funds over to an IRA once you leave the company. Unfortunately, a failing employer can cancel that plan at any time while you are still employed and claim any funds not contributed by you. Once you leave the company, your benefits are protected by federal law and insured by the federal pension guarantee fund (but unfortunately as they learned at Bethlehem Steel only part of the benefits are insured).In this situation, your best course of action is to find another job pronto. That would also allow you to move your 401K funds.
FYI, 401k is not the same as pension. YOU own 401ks and the company owns pension plans. 401ks are called Defined Contribution plans and pensions are called Defined Benefit plans.-dr.nonlinear-
In this situation, your best course of action is to find another job pronto. That would also allow you to move your 401K funds. If I find another job, after giving 2 weeks notice, the entire pension should be able to be moved without penalty or reduction?Since the company knows I'm leaving, is there anything tricky they may try in regards to holding certain pension funds?Thanks,Brett
Generally once you leave your employer, your 401K plan can be rolled over to an IRA. Some plans have vesting rules that might prevent the transfer of employers match funds.This much is required by law. The company can sometimes delay depending on the details of its rules. If someone like Vanguard is the custodian, usually it will be prompt. If its someone else, it can take months.If you also have a defined benefit pension plan in which you are vested, that one may have rules that require you to leave it with the company until you are eligible to collect benefits. Most will let you cash out the vested cash value or roll it over to an IRA. But again rules of company plans can vary.
Since the company knows I'm leaving, is there anything tricky they may try in regards to holding certain pension funds?They can change custodians! I quit just as the company I worked for decided they wanted to change. That held up my money for six months.Barbara
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