[delaneyjsjr98]

Last year my employer laid me off I still have a 401k plan with them.. It is managed through Merrill Lynch. I want to know what the reason would be for them to deny me closing the account and withdrawing all the money.I know about the fees and penalties. I have asked them twice to do this and they have told me I have to wait 5 years.I am 53 presently unemployed and need money to pay my car off before it is repossessed. It is my money and just under $10000Any legal advice would be appreciated.

[Fr_Chuck]

None, if you are fired and no longer employed, if your status is still "layed off" and you are subject to being called back to work, then you are still an employee and can not get the money until you are no longer an employee.

[delaneyjsjr98]

I am no longer an employee was basically fired for low sales.

[ebaines]

There is no reason why they would deny your request, unless the administrator is not aware that you are no longer an employee. It may be that your ex-employer's contributions to your 401(k) has a vesting period, but even so, that shouldn't affect your ability to withdraw your own contributions.

I suggest you call the admin and have them explain the precise rule in the plan that prohibits you from taking a distribution. Also ask if there is any rule against you rolling the account over to an IRA. This is one of those things that active employeees can't do but ex-employees can - so if they continue to stonewall you can roll your account to an IRA and then take withdrawals from there. Finally it seems you are aware but just to make sure - remember that you will owe ordinary income tax (federal as well as state/local if applicable where you live) plus the 10% early withdrawal penalty. The amount that the admin automatically withholds for federal taxes is 20%, which may not be sufficient for federal taxes dependng on your adjusted gross income for the year, and they do not withhold anything for state/local taxes. So be sure to keep enough cash to be able to pay the tax man next April.

[delaneyjsjr98]

Thanks for the info.I just called Merill Lynch again about this. Dillards know I am no longer an employee but in the fine print I have to wait 5years for any cash out I cannot Rollover to any other plan and it is fully vested,this is utter BS and doesn't help me any but Thanks for the info.

[joypulv]

That fine print sounds illegal to me?

[delaneyjsjr98]

Hi It sounds very illegal to me.I said M Lynch but I should have said Wells Fargo.(Go figure).But saying that it is Dillards plan,I just need to wait another 4years then I will be 57 and for sure going to Close out the account.Thanks

[ebaines]

Could it be that this 401(k) plan is actually a "Roth" 401(k) - that is, one that is funded with after-tax dollars but does not generate any income tax upon withdrawal? Roth 401(k)'s do require a 5-year waiting period for withdrawals of the company contribution plus any earnings (otherwise income taxes are due), but you should still be allowed to withdraw your own after-tax contributions.