Problems rolling over a 401k to an IRA

[jpdmdmjp]

What is the name of your state? MARYLAND

What is the name of your state? MARYLAND

As required by my former employer, my request to rollover the 401k I had with the employer to an IRA had to go through my former employer's plan administrator, which happens to be the director of Human Resources. I faxed my request to his attention. After about two weeks, I contacted the middleman that deasl between my former employer and the investment firm that holds my 401k. He indicated that there was a problem with the paper work, but he would not elaborate on the details. After further looking into the matter, I found out the the plan administrator failed to send the proper forms to the investment firm, hence delaying the process for about two to three weeks. On top of that, the plan administrator failed to ask me if I wanted the check sent directly to me or directly to the custodian that hold my new IRA.

After communicating the the plan administrator via e-mail, he now refuses to answer these two questions: Why was I not inform of the guarantee signature? Why weren't the proper forms send to MFS the first time?

This is what how he responded:
I have provided more than sufficient information to you regarding your
concern. You seem to have a different viewpoint. That is your
privilege. Unfortunately, I have nothing more to offer. This is my last response to you regarding this matter.

Does the plan administrator have any liability in failing to process my request in a timely manner and can I have my former employer compensate me for the economic cost of having a check of approximately $17,000 sent to my home address instead of sending the check directly to my new IRA account where it would have started earning interest?

 

[olgethorpe]

Having been on both sides of this stick, IMHO, you've got at least 4 maybe 6 people involved who aren't real interested in making your life easier. You've got your former employer, the plan admin, the plan managers, the guy that set up your new IRA, and the minimum wage clerk that had to cut the check. Who know who got pissed at who along the way.

I'd suggest you just get on with your life and make sure you get the check in your IRA quickly before the IRS gets interested. In today's economy, there's a real good chance that the couple extra weeks in the 401k made you more money than it would have in the IRA. Depends on the mix.

 

[hdwillis]

Tax Liability

I'd say that your bigger problem is the tax liability that you may have accrued in the transaction. Since the check was sent to you directly and not to the investment house FBO, your employer may have automatically taken out taxes and penelties, reducing your entire amount by as much as 40%.