401 k rollover problem

[Guest me]

Upon my retirement 5 years ago, I instructed my employer to roll over my 401k and pension plan funds into an IRA. I was told the entire amount was transferred. 2 days ago, I learned that the entire amount was not transferred and $10k remained in the plan. I have never received a statement regarding any benefits remaining or whether there were additional funds in the plan. Now, my former employer just wants to give me the remaining balance. In the interim, I have lost the use of this money. The IRA I rolled the initial proceeds into has done very well and I would like the difference in interest between the plan interest(more like a loss in interest)and the interest I would have made if all the money was rolled over, as instructed. Do I have any recourse? Can anyone refer me to specific ERISA provisions to review before I consult an attorney. Also, the same thing happened to several former employees.

[jlf]

Your prior plan is liable. First present your case to the plan sponsor. As a last resort you can go to Court.

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yes

[KIP KRAUS]

me:

I don't want to sound flippant, but how does a person not know how much monies is in his account? Didn't you and the others you mentioned recieve periodic statements? $10k is a lot of money to be overlooked.

Was this perhaps the company's profit sharing portion of you account balance? Regardless, what ever amount of money that was initially left in the plan should have been in some sort of vehicle that was earning additional monies, and from that perspective you should be entitled to any earning, or is the $10k inclusive of earnings?

Good luck.

[Dave Baker]

Maybe the $10k was your account's contribution for your last year of employment, which had not yet been calculated when you retired and received your account balance at retirement?

It's common for a plan to need to wait until the end of the year to determine how much goes into each eligible participant's account, and to provide a contribution for people whose employment terminated during the year due to attainment of early or normal retirement age as defined in the plan.

The contribution might have been for $8,000 but has grown to $10,000 over the past 5 years, as well.

[Guest Connie]

me,

Which plan is your remaining balance in? If the 401(k) defined contribution plan, then you should have received periodic statement. If its located in a defined benefit pension plan, the situation might be somewhat different. Suggest you write the plan administrator, usually the sponsor, and find out more information about where this money is located and why your ealier instructions were not followed, before going any further.

[Guest me]

Dave: Thanks for the response. Yes, it is embarrassing that I didn't know how much was in the account. I only received yearly statements. Although I knew how much was in my 401K (I did the max every year), my law firm had a strange profit sharing plan with ee deductions for a pension plan and er matching. It never was clear what was in the account and when it was put in. Oddly enough, there are 10 attorneys who left who have the same problem. This was not a nice place to work! I believe what happened is what you suggested (i.e., the er matching was done after I left and I was just never told).

Query: Can I get the difference in interest that I lost had the money been rolled over 5 years ago? I received a stmt. 2 days ago which reflected the last quarter and it shows a loss. I have requested the statements for the last 5 years. Had the money been rolled over, I would have made much more than the plan. Any thoughts?

I am requesting a copy of the plan, an acctg. of my money for the last 5 years and an explaination as to why I wasn't notified of the addt'l funds. Should I do anything else? Is there any agency I should report this to? Any ERISA code sections I should review? Thanks for your help!

[Jon Chambers]

Although I sympathize with your plight, I'm not sure you have much recourse. As I understand the facts, your former employer processed your initial distribution election based on the account value when your election was received. You then received an additional contribution. Although it would seem reasonable to also distribute the additional contribution, there is no law requiring it, and you didn't request it (I know, b/c you didn't know about it). You never received a statement, but the law only requires that statements be provided ON REQUEST, and you didn't request a statement (now that you have filed a request, you should get something. If you don't receive anything, you may be able to fashion a claim).

While you may have a tenuous claim for breach of fiduciary duty for improper management of your funds, I'd suggest that you conclude that you're receiving $10,000 more than you expected, and that's not so horrible. Meanwhile, your experience points out the problems that are experienced by firms employing plan administrators with poor management skills.

If you really want to push this, there are probably other things your former employer did wrong that may make them liable. Did you receive proper tax notices regarding your distribution? Did you receive a Summary Plan Description (SPD)? Have you been properly notified of plan changes? These are all legally required notifications that your former employer may have missed.

Hope this helps,

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Jon C. Chambers

Principal

Schultz Collins Lawson Chambers, Inc.

(415) 291-3004