Must Employer's Notify Former Employees When they Change 401(k) Admini

[Guest jeaniec]

What is an employer's responsibility to notify former employees when the employer moves the company's 401(k) plan to a different company (i.e., Aetna to Fidelity)? And, if they are not required to notify the former employees, who determines what funds the former employees' money is invested in?

[rcline46]

Assuming a self directed 401(k), and current employees have the right to change investments, then former employees must be given the same right. Why? Because it has nothing to do with employment! It has to do with being a participant!

[Guest jeaniec]

In my case, former employees were not even notified the company was changing administrators. I found out when I checked my balance and found out my money wasn't there. I called the company and was told I would get something from the new administrator by mid-August, but I've yet to see anything. Does anyone know where I can find out what they were supposed to do legally? Thanks!

[Guest RBlaine]

I suspect that the monies were mapped over to the new companies funds and they were invested in the same general assets that you were using. So, I wouldnt worry about money being uninvested.

The problems we've had is that the new company wont allocate the money in the new funds to individuals until they get a good reconciliation from the prior company. The prior company is not always quick to finalize anything. The money will then be allocated retroactively to the each person on the date of the transfer. The longest I've seen this process take is a month or so and the participants did not have any uninvested money during any of that time.

I suggest you call the plan administator to find out the current status of the transfer. Be nice. Very few of plan administrators want to screw around with participants money, there is too much liability. Having said that, it pays to be diligent so you dont end up as one of the ones that gets messed up.

If it is the new administrators that are the hold up, you will probably be given their number to call.

[Guest RBlaine]

I'm sorry, I really didnt answer you question. I just wanted to allay what might be some of your fears..

[Guest jeaniec]

Thanks for your responses. Now I have an added problem. When I called Fidelity to request rollover forms, I was told to call my former employer. When I called my former employer, they told me Fidelity is supposed to handle that, but they are having problems getting it worked out. In the meantime, I can't move my money. Pretty messed up affair, I think (but typical of this employer, which is one of the reasons they are my former employer).

[Guest pitaman1]

I am also in the same boat as jeaniec. My previous employer has not sent me anything, nor has the new company.

I sent them both a letter (registered) saying that i will be contacting the Dept of Labor by X date if i have not heard back from them, received paperwork, etc (cc the dept of labor on your letter). If you do this you should get some action fairly short order!!

Keep me updated on your problem.

[Guest clayman]

You should remind your former employer (or better-the person serving as trustee of the plan) of their fiduciary responsibility and the fact that any negligence on their part which restricts your investment choices or timing is a violation that you can sue them for. Also, get together with other former employees and if they are also having this problem, now you have a group that can threaten class action suit if if comes to it.

[Guest Kay]

I would like to say this is one of many, many examples of why it's best to take the money and run when you terminate employment. The situation is very common. It is causing you grief even though there's been no wrong-doing on the part of the employer. Imagine if they were up to something! I always roll my funds into a rollover IRA immediately upon terminating, and advise everyone else to do the same.

[Guest JimJ]

I would agree w/ Kay, but do not believe it is a necessity. Depending upon who pays the fees for your plan; it may be advantages to remain in the plan. Of course fund options/quality should also play a role in your decision. On the other hand, your former employer has a right and frankly an obligation to its employees and participants to make sure the plan is run properly and the administration is not only timely but accurate. In the quest for good service and accurate administration, there is sometimes a need to switch providers. Unfortunately, it is difficult to satisfy all participants (active & terminated) when these changes occur. The simple fact that it is taking so long to get the plan up and running (i.e. - out of blackout) may be a reflection on the prior recordkeeper and an indication that your former employer made a good decision to move.