Blackout Notice

I had a former 401k from a couple years back that held many individual stocks. The trustee failed to send out a blackout notice but the current broker called me saying they were moving plans and I could transfer my account “in kind”. I submitted all the paper work through proper channels on my end as of December 28th. I called the current broker as a courtesy and he said he sold all my positions at the request of the trustee the previous day. My distributon paper work said I had 12/31 or sooner. The trustee made those unauthorized sells without my approval. They claim a blackout notice was sent. I got a copy via email yesterday. Assuming I had received it. It makes no mention that individual positions will be sold into cash or that new provider will not allow individual stocks. I’ve asked them to reverse trades. They say they won’t my Ira is waiting to transfer in kind. It’s several $100,000. What recourse do I have?

You must first detail the series of events as they happened in order to ascertain if the plan provision or a notice was not properly followed.  This would be different from saying "they did this or that" while only providing details to support that assertion.  I'm not choosing sides, but merely trying to visualize the series of events as they happened.
1) 401(k) of a Former Employer is moving the plan from one investment platform to another.
2) The new platform will not allow the investments in the individual stocks that you're invested in.
3) You never received a blackout notice instructing you to take the investment actions you feel necessary given this new change.  However, the Employer is saying that it was provided to you.
4) The date on the blackout notice is _________? If a blackout notice was provided, then the trades that took place would typically not have taken place until the plan was in blackout.  At this point, you will no longer be able to direct your investments and the funds will be realigned pursuant to the conditions stated to you in the notice (which you did not receive).
5) You submitted distribution paperwork to them on December 28th.
6) You were advised that your account was liquidated the previous day and all your funds were liquidated; presumably pursuant to the terms previously communicated to you in the notice.

If the funds were liquidated as previously communicated to you and the notice was provided to you in a manner that would satisfy "proper delivery", then you may not have any recourse.  When I say "proper delivery", it's not a technical term rooted in statute.  It's basically saying that a process was in place to communicate to all participants to give them ample opportunity to act.  This is typically done by mailing the notice to the last known mailing address they have on file.  

Good Luck!

Thank you for reply and suggestion.  Here is a layout of the chain of events:

   1.  2007-2014 employed and participated in employer 401k. Inside my account had the ability to self direct and would call Broker if I wanted to buy and hold a individual position. 

2.  2015 left employment and never moved it to my new employer or an IRA as expenses were relatively low.   During my absence the broker or trustee would not make trades as I would only do so by contacting broker. 

3.  November 21, 2017 the current broker calls and indicates the employer is moving to different provider and broker. He indicates I can "transfer it out in kind by initiating paper through my own broker dealer channels to my IRA."  He also sends letter on November 22, 2017 saying the same in cover letter.  In addition, he includes distribution paperwork that says it will take place "12/31/2017 or sooner". 

4.  December 28th 2017, my broker dealer received ACAT paperwork in good order to transfer my holdings out "in kind" to my IRA.  As a courtesy, I called the outgoing broker to let him know  and he says the holdings were sold the previous day  I said who authorized this and he said the name of trustee and the plan had started blackout period  I said I was unaware and didn't authorize those trades. He said trustee sent out and had a copy of received mail via certified delivery.  I email the trustee for a copy and he did not send certified.  He sent a copy on the 28th of a regular envelope with my address along with a copy of blackout notice that's says it started on 12/27/2017.  

A couple of points and questions:

1.  Via email on the 28th of December was first I had seen of the notice  contrary to a copy of an envelope with my address postmarked from November.  

2.  The blackout makes no mention that self directed accounts will no longer be available and no mention that accounts will be liquidated into cash.  

3.  The new broker sent a letter to me via email on Dec 29th saying "they would not reverse the trades as they heard no communication from me and it would placed into the Balanced Portfolio"

4.  How can a trustee instruct a broker to sell all my holdings without discretionary trading  in all previous trades the current/former broker always called?  So why wouldn't the same protocol be followed this time?

5.  If the distribution paperwork says it will take place on 12/31 or sooner, than how is it I have paperwork completed on 12/28 and the account will not move In Kind ?  I recognize now there saying blackout started 12/27 but I received no notice.  Honestly had I, it wouldn't have matter as it makes no mention that self directed will no longer be available and your holdings will be liquidated.  

Thanks in advance for any thoughts or suggestions.  All I'm asking is the trades be reversed so my transfer "in kind" can be made.  

As a practical matter, how much have you lost so far? Ie, have the stocks gone up or down in the last three trading days? How much are the transaction fees for the sales?

If its a minimal loss the path of least resistance may be to transfer the cash to your IRA and repurchase the stock.

If the stocks have gone down since the sale you may even be ahead of the game.

That's true. I know fronm the end of November till December 26th the account picked up $7,100 on the holdings. My concern is if the market continues upward and I can't do anything during the blackout including moving it into my Ira while having to sit idle.   My broker said the cost would be around $1,500 to repurchase. 

Even though you have investment authority in your individual brokerage account, it is still a plan asset and under the control of the Trustee; it is merely earmarked for your benefit.  The Trustee will allow you (under the terms of the plan) to direct the investments and would advise you, in advance, when your ability to direct those investments will expire.  It's not "YOUR" money; it's the plan's money but set aside for your benefit.  You have an ERISA protected rights that say you and your beneficiaries will benefit, but the Trustee has the control of it while it's in the plan.

When that plan decides to move from one platform to another, they're not going to stop to accommodate the wishes of one participant.   They'll notify you with the intent of giving you ample opportunity to change your investments (or even take an eligible distribution and rollover) prior to them switching platforms.  They're typically liquidating and transferring immediately at the end of that notification period.

Good Luck!

The notice was never received until in my email request on December 28th. If it had been received prior to the 30 day Blackout Notice wouldn't it need to mention the liquidation or the fact that self direction is no longer going to be available?

My understanding of the notice is to arm the participants with the proper knowledge of the change so one can properly make a decision.

Though it wasn't received prior to the blackout I would have thought it would have had language that explained that self direct was no longer an option and your account will be liquidated during the transition.  

Somit doesn't need to explain that within the notice?

To your point, the notices should be written and issued so that there aren’t any surprises. There is a standard that must be met to ensure they are issued, but I don’t think the onus is on the sponsor to ensure you actually receive it.  If they mail it to you and a dog breaks into your mailbox and eats the notice (along with your homework ), then that would not mean that the notice wasn’t issued timely. 

Good Luck 

I am siding with the plan on this one.  You were notified at least 30 days before the blackout by phone and by mail by your broker that you needed to move the money.  Since blackout notices are such an integral part of the conversion process these days, I would also have to believe that a notice was mailed to you in November from the employer.  The broker told you that the money was being moved by 12/31/17 or sooner.  Since 12/31 was on a weekend, it would have to be ordered sooner.  Since the trades would need to settle by 12/29 for year end purposes, ordering the trade on 12/27 would be the most logical day to start the process.  As of 12/29, all accounts would be closed at the old recordeeper and there would be no logistical way for the recordkeeper to even re-buy the money into the funds .  Unfortunately, you will need to wait until the blackout is lifted and then request a distribution of funds to your IRA and buy into investment options that you choose.