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Author: zee1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76420  
Subject: Corp. Split - What happens to the 401K Plan? Date: 8/5/1999 1:49 PM
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I know someone who is in a company that sold off a division to become a new entity. I was wandering if there might be a way for the employees to get their 401k monies rolled over into a self-directed IRA. I was told that any time a 401k plan was terminated, or people were terminated from the plan, they had the right to roll their monies into an IRA.

Does anyone have any idea how to go about doing this?

The company does not want to let their employees get at the monies and instead created a new 401k plan in the new entity.

Regards,
Dave
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12851 of 76420
Subject: Re: Corp. Split - What happens to the 401K Plan? Date: 8/5/1999 2:36 PM
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All you can do is wait for what they tell you. If they have created a new 401K at the new company, they probably can transfer your funds without your permission (and this would mean you cannot transfer to an IRA while you work there). On the otherhand, if they left your account with the previous company, you probably would have the option of transferring the balance to an IRA.

Have you asked your plan representative or HR person about this? You may have no choice, but on the otherhand if you make your desires known, maybe.

Good luck.

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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12852 of 76420
Subject: Re: Corp. Split - What happens to the 401K Plan? Date: 8/5/1999 2:40 PM
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Generally speaking, the employer is control in these type circumstances. On the presumption that the new "spun-off" division immediately created its own 401(k) plan that is the same or substantially similar to the one employees were enrolled in prior to the spin-off; then all of the employees who traveled to the new company performed a "step-in-stride" transfer, e.g. they never terminated their employment with either oldco or newco. As a result, the assets get transfered from the 401(k) plan of oldco directly to the 401(k) plan of newco, essentially forstalling an employee's ability to be treated as terminated and thus perform a rollover to an IRA.

Sorry, I'm sure it is not the answer you would like to receive.



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Author: RobinB Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12911 of 76420
Subject: Re: Corp. Split - What happens to the 401K Plan? Date: 8/6/1999 3:49 PM
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It's also possible that the old plan is being terminated. But, if this is the case before the assets can be transferred to new custodians, the company has to have a termination letter from the IRS. This takes forever and ever and ever. But, once the company has it they can dissolve the plan.

Good Luck
RobinB

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