Profit Sharing Plan Payout Delay

What is the name of your state? Illinois
I voluntarily terminated my long standing employment effective December 31, 2003. The firm I worked for had a profit sharing plan as to which I was 100% vested and my financial interest in the plan is substantial. At the time of termination, I had the choice of either taken a distribution based upon the value of my interest in the plan as of June 30, 2003 (the last day of the plan's fiscal year), or continuing to have my interest in the plan remain until June 30, 2004. I opted to leave the money in the plan until June 30, 2004, and when the funds are transferred, the value will be based on my interest as of the June 30, 2004 date.

It is now mid-November 2004 and the former employer claims they are still not in a position to release the funds because their accountants have not yet determined what my position in the plan was as of June 30, 2004. How long can the former employer delay the payout (actually, a transfer to another tax deferred plan) of my interest in the profit sharing plan? And, is there any recourse for the missed investment opportunity for the period of time after a reasonable delay in which the transfer should have occurred?

Some Plans only distribute proceeds at certain times during the year - the last day of the month, quarterly, annually, etc. Without knowing what your former employer's Plan specifies for distribution dates, it's not possible to answer your question.

Plan's distribution dates

The plan does not have specific dates for distributions. It does require that I be employed at the end of a fiscal year (June 30th) in order to receive the typically 15% profit sharing contribution (based on income in that fiscal year), but that is not my issue.

The entire reason for not yet making a distribution is that the accountants haven't yet determined what the value of my interest in the plan was on June 30, 2004 and until they do no distribution will be made. I have also been told that in years past it has taken even longer than the 4 1/2 months that I have experienced so far.

My concern is that no earnings whatsoever will be added to the June 30, 2004 value, and that I cannot do anything to address better than a quarter of a million in assets from remaining idle just because the outside firm of accountants the former employer uses have not determined what my interest as of June 30, 2004 is worth.

There has to be some prohibition on this kind of a delay. An employer cannot be entitled to take as long as they want at the expense of the former employee losing their investment opportunity while the employer gets around to determining what my position was. And, what of the earnings on my interest in the profit sharing plan since July 1, 2004? Where does that go to?

Again, not knowing the particulars of this employer's Plan, I have no idea what it says about earnings and these periodic valuations or why this is such a complicated process.

The amount of time this is taking certainly seems excessive. I suggest you give the federal Department of Labor a call and see if they can be of assistance (202-693-4650). The federal DOL has regulatory oversite of employers' retirement plans. If your employer's plan is out of compliance in some regard, they're the ones who will intervene.