401(a) Rollover Allowed?

[Lou12345]

What is the name of your state (only U.S. law)? New Jersey

I have a 401(a) retirement account with TIAA Cref. I funded it while I was a state employee. I contributed and my employer, the State of New Jersey, matched my contributions under their Alternate Benefits Program. This program is what the state now uses instead of giving employees pensions. I left my job a couple of years ago on good terms, and I was fully vested by that time.

I now want to rollover this 401(a) into an IRA. I have spoken to four different people at TIAA Cref. Two people told me I could roll it all over with certain penalties, and two people told me I am not allowed any distributions (including rollovers) on employer contributed funds until I am 55 years old. I am currently in my 30s.

How much control over the employer contributed funds do I have with this 401(a) (employee contributions are not the issue). I have been told two different stories about whether or not I can move the employer contributions. I was fully vested when I left the job, so isn't the whole account including employer contributions under my control? Does the State of New Jersey retain some control over their contributions even though I am no longer an employee? I would like to roll the whole account over to an IRA, and I don't know legally whether the state contributions to the account are under my control or not.

Thanks for any help!!

 

[cbg]

There are two things you have to look at. First, does the LAW allows such rollovers? And if the law allows it, does the plan document? The plan document can legally say no, even if the law says yes.

Who are the people who have given you the information? Are either of them associated with the plan itself? The law does permit a 401(a) plan to be rolled over IF the plan document also allows it.

 

[Lou12345]

Thanks for the reply cbg. I believe the plan document is a little unclear, hence the confusion at TIAA. It is a government constructed document after all. The plan document at one point says that if you retire you can take distributions at anytime after that, and you can retire at any age with the stipulation that you will never be allowed again to participate in a State of New Jersey retirement plan. At seperate place in the plan document it says no distributions of employer contributions are allowed before the age of 55.

So the plan document isn't particularly clear, and I think that's why TIAA "has to call me back" to figure it out. Now if they decide that there are no employer contribution rollovers before 55, can I fight them? Is the plan document legally binding, or do I have a claim to those employer contributions even if they decide the plan document excludes rollovers before 55? Basically, can I fight them plan document be damned on the grounds I was vested, or do I have to fight them on the grounds that the plan document allows it?

 

[cbg]

The plan document IS legally binding. Neither you nor TIAA-Cref can take any action not permitted by the plan document. If the plan document does not permit rollovers until age 55, then you do not roll over the funds until age 55. If the plan document blocks rollovers of employer contributions till age 55 then the employer contributions stay where they are until you are 55.

If you are vested, the money belongs to you and you will get it eventually. But you ONLY get it on the terms of the plan document. If that means waiting till you're 55, that's what it means.

 

[Lou12345]

Great reply. Thanks again cbg.

 

[Lou12345]

Still out there cbg?

So as I said earlier the Plan Document is a little ambiguous when it comes to rollovers before 55. When I read it I think it allows them, TIAA obviously says the Plan Document does not allow them. But one thing that the Plan Document does make crystal clear is that the Plan Administrator has the final say in all matters, can overrule anything contained within the Plan Document, and basically reserves all rights when administering the plan. The Plan Administrator in this case is the State of New Jersey.

So since the Plan Document wasn't 100% clear about rollovers before the age of 55 I contacted the State of NJ, and the State of NJ signed off and approved my rollover. The State sent all the forms back to TIAA saying they authorize the rollover, and TIAA is STILL not allowing the rollover. Again, the Plan Document makes 110% clear the State has full authority over all matters and power to do whatever it wants with the plan. Now the State has signed and approved my rollover request, and TIAA still refuses to honor it! When I asked them why, they simple said the same thing they have said the whole time, "the plan does not allow withdrawals before the age off 55," with no further explanation what-so-ever. In fact, when they told me the request was denied they said if they want to take it up with an attorney I should do so.

So what are my options now? In my opinion, they seem to flying in the face of the Plan Document and the wishes of both the beneficiary and the Plan Administrator. Frankly, I'm a little shocked that third party has the gaul to withhold my money when both I and the Plan Administrator have requested that it be rolled over. And they've offered no explanation as to their justification for such an action. How do I seek a remedy here? And I don't think I'm the only one they pull these tactics with. I'm pretty sure their MO is to delay and deny all of these requests while they continue to earn interest and expense fees on the accounts. Shocking in 2015 a company the size of TIAA Cref can pulloff such an obtuse scheme. So I'll contact the BBB, and I guess I need an attorney, one who I have to pay by hour because I don't see any sort of huge damages in this case?

Thanks for any help you can give. I'm furious and quite honestly I'd love to be the one who makes TIAA stop these bullsh*t tactics so the next guy doesn't have to go through what I'm going through.

 

[cbg]

FYI, the BBB is a consumer agency. It has no regulatory authority whatsoever.

First thing I'd do is go back to the state. I work with TIAA-Cref on a regular basis (note - I do not work FOR them; I work in the Benefits office of a very large university who has TIAA-Cref as one of its vendor options) and in my experience with them if someone from the employer - in your case the state - tells them directly to roll the funds over they will do it. It may just be a case of getting the state to talk to them, not just sign the papers. Since there appears to be a misunderstanding between TIAA and the state as to what is and is not allowed, they need to be the ones to work it out.

But just be aware - I saw at least one instance where, when this happened, it was found that TIAA was right, and we had to withdraw our approval. Just be prepared for that possibility.

You may eventually want to talk to a lawyer, but I don't think you're there quite yet.

 

[Lou12345]

You're the man (or woman if that's the case) cbg!

Will do. I was considering that option anyway. I'll go back to the State, ask them to clarify things with TIAA. If the State comes back to me and says I'm wrong so be it, but if the State makes it clear to TIAA that the rollover is authorized then I want to see some action from them.

And just to vent a little, if the State does authorize the transfer in the end then TIAA will have been keeping my funds hostage after they got the forms signed from the State, collecting interest and expenses during that time. If they do this with a few thousand people every year, delay their requests until they have absolutely no plausible excuse to do so any longer, they wind up reaping substantial revenue I assume. Furthermore, when you ask TIAA whether rollovers are allowed their standard response with this plan (and I assume others like it) is to simply say no. They make no effort to explain the possibility of reaching out to the Plan Administrator. And throughout this whole process they have not once explained to me where specifically in the Plan Document it says rollovers before 55 are not allowed, they have simply told me over and over it is not allowed. When I ask them to explain exactly where they read that in the Plan Document I have never gotten an answer. They even went so far as to mail me a letter "explaining" why my request was denied. The letter was two sentences, one of which said "No withdrawals allowed before the age of 55." Gee, thanks for the clarification!

It's a lot of smoke and mirrors, no real answers, dodgy behavior and responses. I know they are non-profit, but I also see that in 2013/2014 they had a class action against them for similar tactics which they settled out of court. Maybe I'm just paranoid and frustrated. Or maybe a sharp and enterprising attorney could look a little deeper into grievances similar to my own and get them to fly right by hitting them with another class action.

 

[davew128]

Honestly, I think the prevailing issue here is going to be the one that says no distributions before 55. Its unusual that a plan document would give the third party administrator the authority to take action contrary to the terms of the plan and for a good reason. At one point I got railed into being administrator a client's 401(k) (which in retrospect was classic small CPA-my boss-taking on work to please a client when we had no business doing it), and you learned a lot about what people try to do with these plans. However I can also tell you that the fee for doing the work wouldn't change based on one employee or the assets of the employee's plan.

 

[cbg]

Maybe it's just regional, or maybe it's just because my employer carries a whole lot of clout, but I've never found TIAA-Cref to be unreasonable. Stubborn on occasion, yes, but honest. Honestly mistaken, possibly - I can't say if they're right or wrong because I haven't read your policy, and I'm really more of an H&W woman than a retirement plans guru anyway. But at least in my experience with them, they're not taking the stance they are to be obstructionist, or to keep your money in the plan illegally, or just because they don't want to deal with it; they're taking it because they honestly believe they're doing what the plan says. 401(a) plans are highly regulated at the Federal level, so it's always wise to err on the side of caution. You can always release money later if it proves to be allowable, but once you release it, there's not much you can do if it's found that you were wrong.

Good luck to you and keep me posted.

 

[FlyingRon]

Despite their hype TIAA-CREF is an absolutely terrible investment house. They have absolutely crappy ROI and they will be obstinate on your legal rights at every state to get your money out of them. About the only good thing I can say about them is it doesn't cost you any fees to use them. Yes, I was a University Admin for Rutgers as well. I'll save you the effort of digging up the plan documents. I have done this. You are absolutely entitled to roll the NJ State 401(a) plan at TIAA-CREF into your own IRA.

Call up TIAA-CREF and tell them you WANT to do it and don't let them talk you out of it. They'll eventually email you the forms which you need to fill out and send back. If you have a broker or financial institution that is going to handle your IRA, they will likely be able to assist you in filling out the form (so the money goes direct to your account at their firm) and they'll have the suitable notary or signature verification required for the form.

 

[cbg]

Well, there you go. Someone with direct experience with the State of NJ. Thanks, Ron.

This wouldn't be the first time different offices react differently to different employers. Just because my experience with TIAA-Cref is generally positive doesn't mean other offices might not be problematic.

OP, go with Ron's advice.