QNEC Distribution

[Guest arihalli]

Hello.

I recently withdrew my money from my companys' 401k plan. I was vested as i had been there 25yrs. However, i want to say that i still work at the firm - but only part time.

Left behind was a Qnec of $133. I was not allowed to transfer that to my IRA.

I noticed that in 3months - there has already been 12dollars removed from the QNEC in fees. I annuallized that at approximately a 40% wouild be removed for the entire year. Seemed rather exhoribitant - so i asked the administrator to find out why i can't have the QNEC and why i have to lose the fees if it was mine.

The answer was that 'outside' plan administrator stated that a QNEC could not be distributed to someone who is still working at the firm. The only time it can be distributed is if that person is terminated.

Does anyone know if this is correct - since - doesn't seem quite fair to the participant that worked 25yrs that all their vested money should go into fees of the bookkeeper.

I am thinking also, of all those other employees, that might have QNEC fees...... thanks for listening..

[K2retire]

Generally speaking, in order to take any money from a plan while you are still employed you must meet certain IRS requirements. Some typical examples are if you're over age 59 1/2, or if you have a hardship such as medical bills or a pending foreclosure. Even if you meet the IRS requirements, plans are not required to let you withdraw funds while you are still employed by the plan sponsor. Some may allow hardship withdrawals but not withdrawals over age 59 1/2, for example.

Your first step is to look at the Summary Plan Description. It will tell you the reasons that you may be allowed to withdraw your balance and which sources of fund may or may not be withdrawn. If you don't have a copy, your employer should be able to get you one.

[masteff]

You should also ask for anything detailing fees if they are not fully listed in the SPD. Figure out why you had the fees and whether you have any action available to avoid those fees in the future (such as moving to a different investment option, etc).

http://www.dol.gov/ebsa/publications/401k_employee.html

[Guest arihalli]

Generally speaking, in order to take any money from a plan while you are still employed you must meet certain IRS requirements. Some typical examples are if you're over age 59 1/2, or if you have a hardship such as medical bills or a pending foreclosure. Even if you meet the IRS requirements, plans are not required to let you withdraw funds while you are still employed by the plan sponsor. Some may allow hardship withdrawals but not withdrawals over age 59 1/2, for example.

Your first step is to look at the Summary Plan Description. It will tell you the reasons that you may be allowed to withdraw your balance and which sources of fund may or may not be withdrawn. If you don't have a copy, your employer should be able to get you one.

Thanks for taking the time to reply - i appreciate it..

[Guest arihalli]

Generally speaking, in order to take any money from a plan while you are still employed you must meet certain IRS requirements. Some typical examples are if you're over age 59 1/2, or if you have a hardship such as medical bills or a pending foreclosure. Even if you meet the IRS requirements, plans are not required to let you withdraw funds while you are still employed by the plan sponsor. Some may allow hardship withdrawals but not withdrawals over age 59 1/2, for example.

Your first step is to look at the Summary Plan Description. It will tell you the reasons that you may be allowed to withdraw your balance and which sources of fund may or may not be withdrawn. If you don't have a copy, your employer should be able to get you one.

Thanks for taking the time to reply - i appreciate it..

[Guest arihalli]

You should also ask for anything detailing fees if they are not fully listed in the SPD. Figure out why you had the fees and whether you have any action available to avoid those fees in the future (such as moving to a different investment option, etc).

http://www.dol.gov/ebsa/publications/401k_employee.html

Thanks for taking the time to reply....i appreciate that..

At 62yrs, for myself, the $100+ isn't that big of a deal. But i work in a Nursing Home, and many of the aides and nurses really have lo-information regarding the fees. Seems to me that someone taking such high fees is so wrong. They do the work and he collects the fees. Which eat into the retirement income they worked for. Well, its symptomatic of a lot of business practice highlighted in the news today.. Thanks again for replying.