Company went bankrupt, cannot get access to funds

[Guest provingring]

My mother-in-law passed away and my father-in-law is now entitled to her 401k. The company she worked for closed up shop and filed for bankruptcy in 2001. The money supposedly is frozen and everyone he talks to tells him to contact someone else. He has talked to Putnam ( Putnam told him in 2004 the dissolved company wanted nothing more to do with the assets and in turn turned them over to the IRS), he has also talked to the U.S. department of labor, the state department of labor, the state department of banking among others. He just keeps getting the run around. He does not know where to turn. Has anyone else had this type of problem? The money is out there but he cannot have access to any of it. Thank you,

[J Simmons]

Keep pressing the U.S. Dept of Labor, specifically EBSA (Employee Benefit Security Administration). That's the agency with the legal authority. Keep pressing and be the 'squeaky wheel' as they are understaffed to handle all the situations like your father-in-law is facing given the current economic conditions.

[mbozek]

My mother-in-law passed away and my father-in-law is now entitled to her 401k. The company she worked for closed up shop and filed for bankruptcy in 2001. The money supposedly is frozen and everyone he talks to tells him to contact someone else. He has talked to Putnam ( Putnam told him in 2004 the dissolved company wanted nothing more to do with the assets and in turn turned them over to the IRS), he has also talked to the U.S. department of labor, the state department of labor, the state department of banking among others. He just keeps getting the run around. He does not know where to turn. Has anyone else had this type of problem? The money is out there but he cannot have access to any of it. Thank you,

This makes no sense. The IRS is not permitted to accept money belonging to participants except for tax withholding. Also how could the money be frozen and turned over to the IRS? What you need to do is find out who was the trustee appointed for the bankrupt company and ask him who is holding the plan assets. You should be able to find that information from the bankruptcy court and it may be available on line. When companies become bankrupt the pension plans become orphan plans because there is no fiduciary to administer the plan. Usually the bankruptcy trustee for the employer hires a TPA or bank to dispose of the assets or the DOL asks the court to appoint it to administer the plan.

[Kevin C]

The DOL has an abandoned plan program that covers plans like this. Their website includes a link where you can search to see if the plan is already in the program. The fact sheet link has contact information for questions. That would be a place to start. Our local DOL office (Dallas) has one person who handles the abandoned plans in our region. If you can find out who that person is for your local office, they may be able to help you.

http://www.dol.gov/ebsa/compliance_assistance.html#section9

I would also check on Freeerisa.com to see if they are current in their Form 5500 filings. If they stopped filing, pointing that out may help you get the DOL's attention. The penalty for late filing is usually $25 per day, but can be as high as $1,100 per day.