Employer canceled the 401k

[Guest Tboyle]

A little background:

1. In Jan, my employer stoped the 401k program. This was done without any prior notice to the workers.

2. By February 1 the plan had be fuly liquidated, and informed us that the fund were had been placed in a money market account.

3. We were not asked or given any options or information.The excuse given was tat we had change payroll companies which meant we could not keep the 401k. (this we discoved was untrue.

4. The new plan didnt start until Sept. 1 (despite our understanding that it had already been done).

5. No interest appeared on the statement recieved in October.

Concerns:

a. Can they do this?

b. Where my interest?

c. What can I do?

d. Where was my money all that time?

Thank you

4. Our statement shows only a 9 cent increase, I do not believe the funds were actually reinvested for months.

5.

[Guest ERead]

Sounds more to me as though your 401(k) Plan went to another provider. This can and does happen all the time in the Market place. It may have been as a result in payroll provider changes, or simple as a cost cutting measure on Plan expenses. Your funds were probably liquidated and sitting in a Money Market account. With out know all you specific Plan details and without seeing your statements, I couldn't really tell you much. If you'd like to know more, you should speak with your Benefits personel in Human Resources. They should be able to provide you with more specifics on the situation, and what has happened to the interest/non-interest you had during that period of time. If I were you though, I'd be happy, as it sounds as though your money wasn't invested during the bad cycle in the market recently. A gain of any sort in October isn't bad.

[Guest PWBAer]

Interesting. Could very well be that your company changed providers. If so, no prior notice is necessary to do this. There are several ways to handle transition to new provider: 1) leave funds fully invested but "freeze" distributions, new loans, investment transfers or 2) move funds to money market account and, once through transition period, allow participants to select among the investment options. A 9 month transition period is outrageous...even for the poorest provider. I would contact HR department. If you get little to no information, then I would look for my nearest office of the Department of Labor, Pension and Welfare Benefits Administration Office. Good luck.

[Guest kchristy]

One possibility is that your old 401(k) plan was terminated for non-payment of premium, or that your employer simply canceled the plan because they were unable to pay for the administration. That would also explain the length of time that went by before the new plan took over, and why information from your employer was confused and inconsistent.

One large provider of payroll and 401(k) services holds employee deferrals and employer contributions its general fund for 30 days before crediting them to employees' accounts, thus earning float. We discovered this when we took the plan over from the payroll company.

This sounds like quite a disappointing situation for you; I second the suggestion that you ask your HR manager for a fuller disclosure of what proceeded from the time the old plan was terminated.