3rd Party Provider Kept $150 from 401K

[SueBee1062]

What is the name of your state?What is the name of your state? California.

After jumping through hoops cashing out my 401K balance owed to me since I was terminated from my job last June 2004 (I received my 401k check today), I opened the envelope with my check in it, and lo and behold, the 3rd party provider company who was handling all the 401k business between my ex employer and the employees, kept $150 for themselves as a service charge. I was expecting $457...the amount I put in. After taxes, and some other charges, and the $150 service charge for them, my check amounted to $215!

Shouldn't this 3rd party provider have told me during the nightmare of the past 7 months I was wheeling and dealing with them in just finding out WHEN I would get my check, shouldn't they have told me they were going to squeeze $150 out of MY CONTRIBUTIONS to pay for their services rendered. I didn't hire them! Shouldn't my ex employer be paying it?

This just sounds wrong. Have you ever heard of this happening?

 

[Beth3]

Have you ever heard of this happening? No, I haven't. Fees that plan administrators receive as payment for their services are typically handled in a different manner. I don't know that this is illegal however. I suggest you contact the federal Department of Labor and see what they. 202-693-4650.

Take another look at the distribution paperwork before you call though. Because you took a cash distribution, the plan administrator was obligated to withhold at least 20% for estimated federal taxes and if you are under age 59-1/2, another 10% for an early withdrawal penalty.

 

[SueBee1062]

I was mistaken. Actually, it was the investment company, The Hartford, not the 3rd party administrator (Polycomp), who withheld $150 for "pension admin distribution fee."

Crud!! $150 is 35% of what I invested and what I expected to receive when I cashed out--except for the taxes being withheld. I already knew about tax withholding. The taxes were nothing on such a small cashout. Their stupid pension admin fee blew everything else away. Why didn't they just keep my whole entire investment while they were at it.

I'm so angry about this. Had I known this was going to happen, I never would have participated in the 401k plan. This has been as poorly managed as the firm I used to work for when I was contributing to this stupid 401k. In truth, I just handed over (rather, it was ripped from my hands while I was blindfolded) $150 to some company for no reason. It took me 10 hours to make $150. I would have been better off putting that same money in a shoebox under my bed or between my mattresses. I thought I was investing, not throwing money out the window.

I'm SO MAD!!!

Thanks for your advice. I will call DOL. I had to contact them earlier because I thought I was never going to get my 401k check in the first place.

I like your quote, by the way (being nice and then rude to waiters...)

 

[Beth3]

I've never heard of an investment firm taking a service charge from the distribution. Do call the DOL.

 

[boonehead]

Read your 401K paperwork, Some will state there is a surrender fee most are if the plan is terminated in the first year, some the fee drops every year until the fifth year when it has no fee. This usually follows your vested percentage the higher your vested portion becomes the lower the fee.When your fully vested the fee no longer applies