How long does an employer have to pay out a pension plan (under $5000)

[Guest Daniel Grams]

I was an employee of US West through August on 1999. In January I received forms to cash out my pension plan as it was under $5000 and I have yet to receive anything back from them. What are the specific guidelines under the ERISA on how long they can take to pay this out?

[pjkoehler]

The employer is not obligated to cashout your vested benefit if it's value does not exceed $5,000, it merely has the option to do so. Consequently, the employer could take the position that, while it may have contemplated an involuntary cashout at one time, it has changed its mind. In brief, you don't have a right to be involuntarily cashed out. I assume that the plan would permit you to elect an immediate lump sum distribution, but you haven't filed a formal benefit distribution request, otherwise we wouldn't be talking about the involuntary cashout rules. If the employer changed its mind, then file a request for a lump sum. However, most likely the administrator is just following a practice that sweeps out all the vested account balances of terminated employees at the end of the calendar year via involuntary cashouts. It wouldn't be uncommon for the administrator to process the cashout based on the NAV of investment fund options determined as of the end of the calendar quarter following the date your forms were received. If the assets are held by a mutual fund company like Fidelity, it wouldn't be unusual for it to take up to 30 days past the end of the calendar quarter to actually issue you the check or complete the direct rollover. You'll, of course, want to square all of my assumptions with the plan documents and SPD.