Company Transfers my 401(k)

[lanna]

California
The part of my company for which I work is being sold to another company. With the sell of my division I am being transferred to the new company. I have been investing in my company's savings plan /401(k) for many years and am completely vested for the small amount my company has matched. I have been told that my 401(k) will be moved into the new company's plan. I have been told that my 401k funds will be moved to the new company's fund which is different. Also the money will be held in escrow account for 3 months where I have no options of moving my money. I seem to have no say about this!!! Is this legal? Do I have any rights to refuse to move it out of my current brokerage account? If I loose money with the movement of these funds out of my current investments into ones I can not choose at all do I have any recourse to make someone pay? THANKS

 

[cbg]

Is this legal? Yes.

Do I have any rights to refuse to move it out of my current brokerage account? No. If the company or the department has been sold you are no longer eligible to leave your money in the old employer's plan. If the new company's plan does not offer your current brokerage account, you cannot leave the money there, plain and simple.

If I loose money with the movement of these funds out of my current investments into ones I can not choose at all do I have any recourse to make someone pay?

No. You are not guaranteed a particular ROI on your 401k plan.

 

[efflandt]

While our company did not change hands, they did move our 401(k) to a different (better) trustee many years ago. At the time of transfer everything from the old plan was put into fixed interest (I think for a full year) before we could move it to our choice of investment(s).

It is not clear in your case if the money will actually be dispursed to similar funds in the new plan or held as interest earning cash during the escrow period. In either case hopefully the funds have no load (sales charge), so you can rebalance without charge when allowed.

In the meantime check out the available funds to see where you want to put your contributions. Diversification does not necessarily mean some of everything, it means enough of a selection to complement each other to smooth out the bumps, so hopefully everything does not go down together.