Z
ZANDSTRA
Guest
What is the name of your state?Michigan
I have a question regarding the legality of a clause within a 401K plan document. If someone could provide insight, I would very much appreciate it.
Our 401K plan is administered by a large payroll processing institution, who also prepares our payroll checks and payroll tax returns.
We have an employee who recently changed status from full time to part time, and wants to "cash out" her 401K plan. The funds in the plan that are allocated to her are vested. She is still employed by our firm - part time.
Our administrator states that they can't perform a voluntary cash out unless the employee :
Retires
Dies
Becomes disabled (more than 1 year)
When on the phone, the administrator references that the above clause is for tax purposes (probably a prohibited transaction). My answer is why can't you dissolve your 401K, and pay the penalty and the tax on the distributions?
Is there a law or cite that supports what they are saying/doing?
Thanks
Doug
[email protected]
I have a question regarding the legality of a clause within a 401K plan document. If someone could provide insight, I would very much appreciate it.
Our 401K plan is administered by a large payroll processing institution, who also prepares our payroll checks and payroll tax returns.
We have an employee who recently changed status from full time to part time, and wants to "cash out" her 401K plan. The funds in the plan that are allocated to her are vested. She is still employed by our firm - part time.
Our administrator states that they can't perform a voluntary cash out unless the employee :
Retires
Dies
Becomes disabled (more than 1 year)
When on the phone, the administrator references that the above clause is for tax purposes (probably a prohibited transaction). My answer is why can't you dissolve your 401K, and pay the penalty and the tax on the distributions?
Is there a law or cite that supports what they are saying/doing?
Thanks
Doug
[email protected]
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