I currently participate in my company's 401(k) plan which is administered by Fidelity. Over the years, it has done quite well for me and I am very pleased with the choices of funds offered. As a side note, I have been using the Fidelity Champion Funds reports from MF Rule Your Retirement to give my portfolio the desired risk characteristics. Pleasantly, 9 of the 10 Funds used in the RYR portfolio are available in my company's 401(k) plan. But all good things come to an end and my company is being acquired by a bigger fish who offers their own 401(k) plan run by Aon Hewitt. The latest information from the acquirers is that 'you as individuals are not allowed to roll over your 401(k) due to the Same Desk Rule, but we are looking to do a one-time transition into our 401(k)'. Does this make sense? My strong preference is to leave my existing 401(k) with Fidelity as either closed until I reach retirement age or else roll it into a Fidelity IRA and manage it myself. I probably have another ten working years left so I don't mind building up a new 401(k) in an Aon Hewitt account but I am not liking the idea of all my 401(k) balance going over there. What can I expect to happen? The only thing I have seen from Aon Hewitt is fancy brochures pushing their "Financial Engines" service to "help" me work on my own retirement saving strategy. The fancy brochures have a lot of bad examples so I guess some people need their help. Not me.Thanks.CADeb
The latest information from the acquirers is that 'you as individuals are not allowed to roll over your 401(k) due to the Same Desk Rule, but we are looking to do a one-time transition into our 401(k)'. I sounds as if you will need to wait for more information about what is happening and what your options (if any) are. My reading of the above indicates that you will not be allowed to roll it over into an IRA, but, perhaps your employer will maintain the existing 401k in parallel to the one from the new acquirer for a period of time. Eventually it will be converted to the new plan.Bob
While it is common for you to be restricted in rolling it to an IRA, it is uncommon for you to be required to roll it to the new 401K.That being said, ask for a copy of both your current and future summary plan description. You might be surprised to find that you have the ability to roll the funds in your new or old plan prior to retirement and maybe even prior to 59 1/2.Post the company names and I will see if the plan(s) is public knowledge.
I believe I disagree with Hawkwin. It is, in fact, common in certain types of corporate transactions for the acquiring company to also acquire the plan, and then merge that plan into the acquirer's existing plan. From my perspective, that is preferable as 1) it protects the plan assets - which if distributable to participants usually (about 80%) gets spent; 2) it increases the asset size and participant base of the surviving plan allowing for greater purchasing power (and the obverse is also true - that if the assets don't go into the acquirer's plan, but the participants do (with zero balances) the plan becomes less desirable to service providers); and 3) greater protections are offered to participant assets held within a qualified retirement plan (under ERISA - a federal statute) than are offered to assets in an IRA.
I think you might have misread my post. I did not suggest that the assets would then be in an IRA. I suggested that they might have an option to leave the funds with the current custodian and still restricted by 401k rules (e.g. inability to spend the funds unless certain criteria are met).
Hawkwin: That almost never happens - unless the selling company remains in business - which I took from the posts was not the case. Every qualified retirement plan (which includes 401(k) plans) MUST have a sponsor, who maintains the plan for the benefit of employees (or those who were employees when their benefits were accrued). EVEN IF the selling company remains in existence (as if this were an asset sale - which I believe it isn't as the original poster mentioned the same desk rule), then the shell of the company remaining would probably want to terminate the plan - in which case tbhe assets would be distributed - and the only way to keep it with the same service provider would be to open an IRA with them.This appears to be a stock purchase (the whole company was acquired) and consequently, the plan moves to the buyer. Most employers don't want to maintain more than one plan benefiting different groups of employees, and in some case the numbers (the Internal Revenue Code imposes a number of tests on the plans, participation, and the benefits) won't really allow it (although two plans can be maintained and tested as if they were one plan - but if the two plans are with different service providers, neither one will have ALL of the data necessary, and most won't perform those tests across multiple plans that they don't handle - requiring added expense to do it yourself (a dumb idea) or to hire a THIRD provider to aggregate and test).The better approach - and really the ONLY approach for the original poster is to suggest that since the acquisition has (or will soon) occurred, suggest that it's time to do a service provider review and select the best of the two (or even others) to handle the plan (as merged) going forward.I always recommend to my clients engaged in M&A activity to recognize that the company is different and has grown - and that is an opportunity to revisit all benefits and select the "best of breed."
Hawkwin: That almost never happens *Shrug* What can I say - our local hospital (with about 8 locations) just went through this and while the employees were required to open a new defined comp, they were allowed to keep their previous funds in the previous companies.
I'm guessing it was an unbundled 403(b) arrangement - a very different animal indeed.
Hawkwin,My employer is Ggodrich Corp. We are being acquired by United Technologies. I would appreciate any information you might be able to find about the plan.Thanks.CADeb
I did not see that Goodrich was on the list as allowing for in-service rollovers but my list is not exclusive. United Tech is on the list. I was not able to get a copy of either summary plan description so I would still ask your HR contact for both. United Tech should allow for rollvers starting as early as 59 1/2 but it might be earlier.
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