[Endri]

I asked the 401k plan to be transferred to an IRA but they asked me if it has been 20 days since you have been laid off, and they said there would be a distribution fee.

I insisted this is not a distribution and there should be no fee if it goes to an IRA.

Does any of you know if this is the case? How do I proceed with these people?

Is it best to be done by email or phone call?

[Anna]

Have the company you’re transferring to take care of it.

[Kyrk]

Anytime money is leaving an account they call is a distribution, even if it is being rolled over.

More often than not there is a small fee associated with closing the account and mailing the check.

Usually less than $100 unless you are opting for overnight delivery.

[Elizabeth]

Read your 401k Summary Plan Description to see a list of all fees. It is not uncommon for there to be a small (maybe $50-$75?) fee for closing out and transferring your account whether that be a rollover or other distribution.

I know my dad encountered this when he retired and rolled over his 401k into an IRA, and be wasn’t happy about it either, but there was no way around it.

[Max]

I left a job and about three years later they forced me to transfer it to an IRA. No fee

[Lindsey]

Each 401k plan has some of its own rules —they can be found in the summary plan description.

My guess is the company chose to require employees to be separated from them for 20 days before allowing a rollover so that any payroll contributions still possibly processing during that time would go in before you roll it to IRA.

This would prevent small balance accounts from staying on their books and causing them fees.

[Chris]

The companies and custodians can charge fees everywhere and is different for every company.

Not surprised there is a distribution fee. Just be aware.

Chances are it is a small fee.

[Author]

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