401k disbursement / loss of funds

[xyzijk]

Michigan / New York
My former employer (NY) said I could leave my retirement money in his 401k plan until I retired, when I was leaving for another job opportunity in Michigan. I did. I have 20 years worth of statements showing a) my balances b) gains/losses c) that I'm 100% vested in the company profit sharing portion (as well as my own $ of course). Here's the problem: I got a check and a letter stating that they're closing my account, but the amount of the check doesn't jive with my statements. In reviewing my old statements I find that a few years ago a large withdrawal was made from my account with no explanation and I sure as heck didn't get that money! I contacted the 401k management company and inquired as to what is happening now and what happened to my money. They researched it (presumably with the old employer) and report back to me that I am not 100% vested. As I recall, when the original Defined Benefit Pension Plan was converted to a 401k, all existing employees were granted a 100% vesting status and any new hires would have a vesting schedule to follow. Anyhow, like I said, I have 20 years worth of statements, some on original company letter head when they were managing the plan, and other statements from several other financial firms that took over the 401k management over the years, all showing me 100% vested in all monies. So, to recap: just a few years back a large portion was withdrawn from my account with no explanation and now they're saying it was because I'm not 100% vested?! Something stinks here, and it's not right that someone has absconded with a lot of my retirement money. Can the old employer get away with this?

 

[Betty]

It probably depends on how the plan document is worded. Can you get a copy & take it to an attorney for review?

 

[Andy0192]

How long did you work for the company before you left? Actual time spent in employment, without breaks in service? Do you have a copy of the SPD? (Summary Plan Description) the rules for time in service to be fully vested should be clearly laid out in the SPD.

Have you contacted the 3rd party Administrator (TPA)? Is there any chance you had taken a loan against the 401(k) at any time? Did you get a divorce during that 20 year time?

You can find some of the information on your former company's 401(k) plan at: http://www.freeerisa.com/5500/Form5500.asp?mode=SEARCH

you have to register for that site - but its free to do a basic search. Find out who the TPA is, and also who the trustee(s) are for the 401(k)

Good luck.

 

[Beth3]

I can only suggest you consult with an attorney that specializes in retirement plans. There's just no way anyone here can comment on whether what occurred was legitimate as we know nothing about your former defined benefit plan and the conditions under which it was converted to a defined contribution plan.

 

[xyzijk]

Thank you all for posting responses ...
Answers for Andy0192:
Q. How long did you work for the company before you left? Actual time spent in employment, without breaks in service?
A. 3 years.
Q. Do you have a copy of the SPD? (Summary Plan Description)
A. No.
Q. Have you contacted the 3rd party Administrator (TPA)?
A. Yes.
Q. Is there any chance you had taken a loan against the 401(k) at any time?
A. No, absolutely Not.
Q. Did you get a divorce during that 20 year time?
A. No.
Answers for Betty: It probably depends on how the plan document is worded.
Q. Can you get a copy & take it to an attorney for review?
A. Yes, I suppose I can request and pay for a SPD copy.

But I wonder if it will do me any good as the current plan calls for a vesting schedule of something like 7 years. But, as I stated, I recall that I was grandfathered in at 100% during the inception/conversion of the the old Defined Benefit Pension Plan into the 401k plan. Also note that I have in my possession 20 years worth of financial statements showing that I am 100% vested in both the company profit sharing portion (as well as my own contributions of course). Some of these records are on the employer letter head when they were doing the administration and the rest are on TPA financial institution statements. I find it weird that they consistently show me 100% vested, wait 15 years to deduct some of my money with no explanation, still show me 100% vested and now when questioned are trying to tell me the reason they deducted the money is because I'm not fully vested? The amount in question is about 4k$. Not big by most standards, but significant to me none the less. I think they're relying on the now current printed SPD and ignoring the documented history which thankfully I have kept complete records of.

Answers for Beth3:
Q. I can only suggest you consult with an attorney that specializes in retirement plans. There's just no way anyone here can comment on whether what occurred was legitimate as we know nothing about your former defined benefit plan and the conditions under which it was converted to a defined contribution plan.
A. How would I go about finding an attorney versed in these matters?

Thanks again to all who have responded so far.

 

[cbg]

How would I go about finding an attorney versed in these matters?

You pick up the phone and start dialing. Begin with employment attorneys.

 

[Andy0192]

It sounds like the transition from the Defined Benefits plan into the 401(k) is going to be a big part of the issue.

Without reading the documents, or knowing for sure just what happened, it would sound logical to me that all existing amounts in the Defined Benefits plan were transferred into the 401(k) as being 100% vested, but the 401(k) matching funds would then follow a normal vesting schedule. In that situation, a portion of the matching funds might not be fully vested with less than 3 years of participation before you left the company.

That is just my opinion, so don't take it as a fact of what really happened. In my opinion, if someone is going to 'raid' a 401(k) they're going to try for much more than $4,000.

 

[Beth3]

How would I go about finding an attorney versed in these matters? You can pick up the yellow pages, start calling law firms, and inquire whether they have any attorneys who specialize in ERISA/employer sponsored retirement plans (it's a very common speciality) and call your local or State Bar Association for referrals as well.