My employer terminated our 401(k) plan and transferred our assets to a

[Guest chrismichelle]

My employer terminated an existing 401(k) plan at 12/31/99 and transfered our assets to a new plan on 3/9/00. How long by law, does an employer have to transfer the assets into the new plan?

[Jon Chambers]

There's no definite time limit. The employer must merely act prudently. And, of course, the employer can't ever receive and hold the terminated plan's funds.

Many employees misunderstand plan terminations. Termination simply means no more contributions. Funds generally stay invested as they were prior to the termination.

Do you suspect some manipulation or mishandling of funds? More information would be helpful.

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Jon C. Chambers

Principal

Schultz Collins Lawson Chambers, Inc.

(415) 291-3004

[Wessex]

Transferring assets to another plan does not sound like a termination to me.

[Guest RBeck]

Two questions - what caused the plan to terminate, and who is the sponsor of the new 401(k) plan? I ask because, as Wessex points out, a transfer of assets isn't necessarily a termination. If your employer was trying to avoid being top-heavy, for example, by terminating one plan and starting another, it won't work. If your employer changed service providers, that's not a plan termination, that's a change in custodian. If your employer was part of a merger or spinoff, there are other, more comples issues involved.

[k man]

depending on some of the answers to some of the questions brought up in the previous posts, you might have be able to allege that you have had a lack of control over the investments. The DOL Regs specifically provide that an employer must give participants the opportunity to direct investments at least once in a 3 month period. However, this would only mean that the fiduciaries could not rely on 404© to protect them. You would still have to show that you lost money as a result of this "blackout."

[Bill Berke]

You didn't say if the new plan is also a 401(k) plan, which could affect the fiduciary issue implied in your question. Transferring plan assets isn't necessarily a termination, as others have already said. There are no rules on the "black-out" period when tranferring assets between vendors or plans. The fiduciary rules require that the transfer happen as quickly as reasonably possible. I've seen black-out periods from 2 weeks to 6 months. It would be the particular facts and circumstances which would determine if there was a fiduciary breech regarding the length of the black-out period. But, there are no rulings, opinions or cases that I am aware of.