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What is the time limit to pay out 401k on a plant closure?

hovensa refinery closed ,terminated my 401k 4 weeks ago now Nationwide is telling me they have four more months to pay out

May 17, 2012 by Patrick in  |  Flag
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3 votes
Mike Fleiner Level 13

This is an interesting situation, and if the 401(k) Plan has been terminated then you should have been provided paperwork to elect a distribution option. If your account has a decent size balance you will most likely want to roll over the account into an IRA. The only reason I can see that the provider, Nationwide, is delaying the distributions may be due to money in a Guaranteed Interest Account or Stable Value fund that has imposed their "put" option. In other words, the GIA or SV manager typically has an option of paying out money in a plan termination event over 12 months if they wish. You should contact Nationwide and ask exactly why the delay in the distribution.

Comment   |  Flag   |  Feb 28, 2013 from Reno, NV

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You may want to check the plan's summary documents and contact the Department of Labor Employee Benefits Security Administration (PWBA) at 1-866-275-7922 (toll free). If your company closed the plan because of bankruptcy there are certain protections in place for your retirement contributions. Obviously, if you held company stock in your plan, then the value will be impacted by the stock's value.

Comment   |  Flag   |  May 17, 2012 from Amesbury, MA

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Patrick, Good question. I am currently closing a nationwide 401k plan now. When the plant closes, you will have 3-4 months to transfer your 401k account out. If you don't, you will be charged a fee to keep the account there or depending on the administrator, have the account transferred out. Call the plan administrator to get your options. Good Luck, Dan

Comment   |  Flag   |  May 17, 2012 from Asbury Park, NJ

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You don’t want to wait 4 months and have Nationwide potentially send a check directly to you. That would be a taxable event, and if you are under 55, an additional 10% penalty. I would recommend you open an IRA account and transfer the money out of the 401(k) now. You can open an IRA at any financial institution. Seek advice from a qualified Financial Planner in your area.

You will probably need a ‘Distribution Form’ signed from the former employer, which may be a challenge if no one is there. If there is no one existing at the former employer, call Nationwide back and get the phone number for the ‘Plan Administrator. Also, while you are on the phone with Nationwide, ask the person there what to do. You may get someone much more helpful than the first time you called.

Comment   |  Flag   |  Feb 08, 2013 from Delray Beach, FL

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