401k forfeiture charges
Client is 53, left company over one year ago, recently took money out of 401k plan (Crossmark) to roll into IRA. Check was made out to client (no IRA FBO designation) and “Forfeiture” was taken out for approximately 10%. Is there any way client can get 10% back if money placed into IRA within 60 days?
Permalink Submitted by Denise Appleby on Sat, 2007-10-13 20:53
No. Because…
—If the amount was not included on the [url=http://retirementdictionary.com/1099-plan.htm%5D1099-R%5B/url%5D, it was not a distribution, and therefore not rollover eligible; and
—The forfeited amount does not belong to the employee. For instance ( this may be a little simplistic, but…), if the condition of ‘owning’ employer contributions is that you work with the employer for X-years, and you work less than X-years , you lose a percentage of what the employer contributes to your account. The percentage varies depending on the [url=http://www.retirementdictionary.com/Forfeiture.htm%5Dvesting%5B/url%5Dschedule of the plan. The percentage lost/forfeited is not part of the employee’s balance that is eligible to be rolled over.