Employer restricting ex-employee rollover
My client was recently laid off and wants to rollover his 401(k) to an IRA. He is 100% vested in the plan. His employer told him that no money can be moved out of the plan until 12 months following separation of service. Can they legally delay his rollover request?
Permalink Submitted by Terri Ward on Tue, 2010-10-05 17:08
I have some older plans that operate this way, but whether or not it’s legal is a TPA question. I would call the TPA and/or request the Summary Plan Description from the employer which would outline distribution rules.
Permalink Submitted by Alan Spross on Wed, 2010-10-06 03:44
If the plan document specifies a time period, the plan is allowed to use that full period. Most plans are able to process direct rollovers in a 2 or 3 week period, but there are some that hold the assets for the time permitted under the plan document. The DOL does not have a specific time limit.