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This made me giggle. Where is this administration firm? North Korea or something?

All I can tell you is that it is SOP. Typically, the non-financial administrative firm is responsible for keeping track of all things administrative and procedural. We (yes, my firm is a non-financial administrative firm) have learned through bitter experience to insert ourselves at every step to ensure that things are done properly. What can go wrong? Gosh, I could write a book (and I may just do that someday). As far as identity theft goes, the non-financial administrative firm already knows just about everything about you. It needs to in order to accurately prepare governmental filings. You should, if you had a peek at all the things that could and do go wrong, be thankful that the non-financial administrative firm is being pro-active and inserting themselves at a point in time where a correction, if it needs to be made, can be done before a problem develops. I admit my opinion is biased, so I welcome others offering you a different viewpoint.

Different firms handle these tranactions in several different ways. Some have the check sent directly to the particiapnt. Some have the check sent directly to the company. Some have the check sent to the "non-financial" administrator for futherance to the participant. Some have the check sent to the "non-financial" administrator for futherance to the company for furtherance to the participant. Some firms even use a combination of the above. At my last job, we left it up to the plan sponsor. Each firm has its own reasons for its procedures.

http://www.irs.gov/Retirement-Plans/Rollovers-of-After-Tax-Contributions-in-Retirement-Plans Excerpt below Can I roll over just the after-tax amounts in my retirement plan to a Roth IRA and leave the remainder in the plan? No, you can’t take a distribution of only the after-tax amounts and leave the rest in the plan. Any partial distribution from the plan must include some of the pretax amounts. Notice 2014-54 doesn’t change the requirement that each plan distribution must include a proportional share of the pretax and after-tax amounts in the account. To roll over all of your after-tax contributions to a Roth IRA, you could take a full distribution (all pretax and after-tax amounts), and directly roll over: • pretax amounts to a traditional IRA or another eligible retirement plan, and • after-tax amounts to a Roth IRA.

I love when people who have absolutely no experience in the financial 401k business/processes decide they know the best way to handle 401k transactions and the laws that surround them. Not sure why you even came on here to ask. What you are stating is standard operating procedures for most employers and most 401k plans. There are protections there that you might not see or value, but it doesn't mean they aren't there and that there is no value to you, your employer or your assets. And honestly $10k in aggregate is nothing for most of these employees. They see much larger account balances/distributions and personal information than that. $10k won't even get them across a border nor sustain them for very long. Their annual bonuses might even be larger than that...mine were 20+ years ago!