Leaderboard

I've worked with Fidelity, they absolutely can do this. They might not make it easy, but it's possible. Your employer (or their third party administrator) might have to open a service request with Fidelity. If they won't do it, look at your SPD for claim procedures. You have a right to bring a claim for benefits under sec. 502 of ERISA. Hopefully just asking for this info will get your employer in line, as you mentioned no one wants to have to bring it to the courts. If they just cut you a check for $7,000, here are some of the consequences of that: It is not a plan distribution, so it can not be rolled over. If you are eligible, you could use it to make an IRA contribution (not a rollover), up to the annual limit ($6,000 plus $1,000 catch-up if you are over 50 for 2021). It is not a plan distribution, so there is no 10% early withdrawal penalty. If it is treated as wages (reported on W-2), it will be included in your income for federal and state income tax, FICA tax, etc. If it is treated as non-employee or independent contractor compensation, you could also owe self-employment taxes on it, plus you may have to file a schedule C to report the self-employment income on your 1040. Even if your employer has you sign something that you agree not to come after them for the $7,000 from the plan later on, that would be unenforceable. Both ERISA and the Internal Revenue Code have anti-alienation and anti-assignment clauses, meaning that it is impossible for you to lose your rights to money that is owed to you under the plan, even voluntarily. So you could theoretically come back for it years from now, and they could still be liable.

The other key factor here is what type of tax form they are going to give to you at the end of the year. For a retirement plan a 1099R tax form is issued. If the company wrote you a check, they may be planning to issue a W2 or a 1099-Misc/NEC. The correct way is a 1099R. If they give you a W2 or 1099misc, the amount is not eligible to rollover to an IRA and you would not be subject to 10% tax.