cash out of investment

[royalepain]

my name is brian and i live in st. louis, missouri.

i worked for a company for 16 years. 10 years of this time i participated in a profit sharing program. i terminated my employment with the company in january of this year. i was sent a letter a month ago form benefits of missouri insurance company asking my to sign a form for either a cash distribution of my account or info. to roll the account somewhere. my wife and i chose a cash disbursment in order to get ourselves completley out of debt. we planned to reinvest 15,000. of the 33,000.. we had the form signed by both of us and had it notarized. the guy in charge of the account at bmi said it has all been processed and we should get our check immediately. however, my former boss (the owner of the company) is said to be the trustee of this account and i ws told he had to write the check to me. he will not do this! he said i had to waite until the end of this year. but, bmi says that policy was changed 3 years ago and that is why they mailed us the form because they had to give us the option. in addition - my former emplyer said he would have to look and see what stocks he needed to sell in order to pay this to me. i do not understand this because bmi says the account is secured and i thought that meant he could not touch the funds in the account (this is a life insurance policy and profit sharing account). i spefically asked bmi is there was any way he could hold this up and they said NO it is your money he has to give it to you. so, what do we do. does he have to release this money? is he aloud to put the money paid into the account in other investments? i don't understand how he can play with money in a life insurance policy? what exactly does secured mean?

thank-you so much for any help you can give us!
please write soon!

 

[royalepain]

just checking!

 

[ALawyer]

This is a rather confused situation.

I am not sure if the insurance company issued a life insurance policy, an annuity, or was acting as manager of a pension or profity sharing plan, or if the plan was tax "qualified" or not. Someone would have to read the actual plan document to know what you really have and how withdrawals work, and when they must make payment to you.

BUT please be VERY careful when taking money out of a qualified plan -- income taxes have to be paid on all non-taxed distributions from a plan that is not rolled over to an IRA or another qualified plan. And if you are under age 59-1/2 there also is an extra 10% penalty tax. And there is also required withholding so if you take out say $25k you only get $20k and the taxes may amount to $10k so you'd need another $5k on 4/15/02.

Call the insurance company and ask what you have and what the rules are. AND consult your acccountant or someone who does tax returns or you may find yourself in deeper debt than you figured.