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I am desperately in need of some help in understanding the process of converting my 401k from one company to another. I was recently traded from one company to another as part of an acquisition. At the same time they moved my 401k from Putnam to Cigna who manages the 401k for the new company. On 9/30 my 401k was valued at $137k on my quarterly statment from Putnam. On 10/31, the date they transitioned the account from Putnam to Cigna, it should have been valued at $153k based on the closing market prices from 10/30. However, they only transferred $65k from Putnam to Cigna. Apparently, according to Putnam, I have sufferd an $88k loss as part of the 'conversion'. The Putnam rep on the phone tried to explain it as a loss on shares I had purchased at a higher price. Wouldn't that have already been taken into account on the market valuation on my statement? Even if the investments had actually declined in value, which I don't believe they have, that loss should have been reflected in my ending market value on my quarterly statement. If I buy a stock for $20 and now it is only worth $10, its market value is $10. I should still get $10 when I sell it. The way I understand this conversion process, I only get $4.25. My account has basically been devalued to the point where I am only getting back my contributions and the matching contributions of the company with almost no growth to show for my years of investing. Can someone please help me understand this??? (I have already posted this to the 401K board, but I need all the help I can get!)

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BBQFool wrote:

<<I am desperately in need of some help in understanding the process of converting my 401k from one company to another. I was recently traded from one company to another as part of an acquisition. At the same time they moved my 401k from Putnam to Cigna who manages the 401k for the new company. On 9/30 my 401k was valued at $137k on my quarterly statment from Putnam. On 10/31, the date they transitioned the account from Putnam to Cigna, it should have been valued at $153k based on the closing market prices from 10/30. However, they only transferred $65k from Putnam to Cigna. Apparently, according to Putnam, I have sufferd an $88k loss as part of the 'conversion'. The Putnam rep on the phone tried to explain it as a loss on shares I had purchased at a higher price. Wouldn't that have already been taken into account on the market valuation on my statement? Even if the investments had actually declined in value, which I don't believe they have, that loss should have been reflected in my ending market value on my quarterly statement. If I buy a stock for $20 and now it is only worth $10, its market value is $10. I should still get $10 when I sell it. The way I understand this conversion process, I only get $4.25. My account has basically been devalued to the point where I am only getting back my contributions and the matching contributions of the company with almost no growth to show for my years of investing. Can someone please help me understand this??? (I have already posted this to the 401K board, but I need all the help I can get!)>>

Not knowing all the facts and circumstances save what you have written, it appears something is way out of whack here. Your account should transfer at market value less a modest charge for administrative expenses. It appears someone has made a grave error and you should pursue the issue with all vigor with your HR/benefits folks. Demand an explanation from them, from Putnam and from Cigna and keep expressing your complaint until you get an answer that's understandable and that makes sense. If push comes to shove, tell them you will complain to the Department of Labor that you have been denied an explanation and are being cheated out of retirement plan benefits. That should get some attention.

Regards….Pixy
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First let me say, thanks for the. It helped calm me a bit as I was in a panic when the Putnam rep told me I had a loss on my account. I didn't think it was right, but sometimes you never know. Logic doesn't always apply in financial dealings. And to think after years of saving and investing in the 401k that I had only my contributions to show for it was somewhat disconcerting to say the least.

I finally got to the bottom of it by calling Cigna. Apparently what happened was Putnam sold the mutual funds I was invested in, but not the company stock. It was transferred directly to Cigna. Hence there was no cash transfer to report. My balance at Cigna is what it should be and the amount transferred when you add in the stock value was within $100 of my calculations. Why Putnam couldn't tell me this despite three phone calls to different reps yesterday is somewhat of a mystery, but all's well that ends well I guess.

Thanks again!!

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BBQFool writes:

<<I finally got to the bottom of it by calling Cigna. Apparently what happened was Putnam sold the mutual funds I was invested in, but not the company stock. It was transferred directly to Cigna. Hence there was no cash transfer to report. My balance at Cigna is what it should be and the amount transferred when you add in the stock value was within $100 of my calculations. Why Putnam couldn't tell me this despite three phone calls to different reps yesterday is somewhat of a mystery, but all's well that ends well I guess. >>

Thank goodness! I was afraid there was a scandal in the making. I'm glad you were finally provided a rational explanation.

Regards...Pixy
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