Can my employer delay my 401(k) and profit sharing distributions?

Full question:

Enter your question here...I was terminated from my job on Jan 28, 2011. A couple months later I requested my profit sharing be distributed to me( I am 100% vested). I was going to keep my 401 with the company for a while but needed some funds to help with bills. I was told I had to take both according to their rules. So then I requested a partial distribution of the 401k and the balance of my profit sharing to me. I am aware of the rules about taxes, penalties, etc. On April 4th I sent over my distribution papers properly filled out and heard nothing. two weeks later I called and starting getting the run-around. I was told I had to wait until the 3/31/2011 funding was done and then I could get the money. So I waited, and gave them a sufficient time to get that done. When I called again towards the end of April I was told the 12/31/2011 funding had just been completed. So I asked if I could go ahead and get the funds up to that date, and was told there are no partial distributions allowed per IRS rules, and I would have to wait. Since I requested the funds long before they will ever do the 3/31/2011 funding(it seems to take them 3-4 months to do so-I feel I should be sent the money now. They refuse. I think they will try to keep my funds, or devalue them in some way since I only worked 28 days past the end of the year. Is this legal and does the IRS have this rule? I cannot find anything on-line about this matter. Please advise. Thank You.

• Category: Employment
• Subcategory: Benefits
• Date: 04/07/2025
• State: Ohio

Answer:

If you haven't done so already, consider requesting a full copy of your employer's qualified plan. This document should outline how distributions are handled after employment ends. Generally, federal law requires plans to pay retirement benefits by the time a participant reaches normal retirement age. However, many plans allow for earlier payments under certain circumstances, such as after employment termination. The plan's Summary Plan Description (SPD) should detail the rules for obtaining distributions and the timing after termination.

Federal law mandates that all plans have a reasonable written procedure for processing benefit claims and appeals if a claim is denied. The SPD should include these claims procedures. Typically, you submit the required paperwork to the plan administrator, who informs you about your benefits and their start date.

If you encounter issues or disputes regarding your eligibility or the amount you should receive, refer to your plan's claims procedure. Under federal law, the following claims procedure requirements apply:

• Once your claim is filed, the plan has up to ninety days to decide, or one hundred eighty days if an extension is needed.
• If your claim is denied, you must receive a written notice explaining the denial and how to appeal.
• You have sixty days to request a review of the denied claim using the plan's appeal process.
• The plan can take up to sixty days to review your appeal, with an additional sixty days if they notify you of an extension.
• You will receive written notice regarding whether the appeal was granted or denied, including reasons for the decision and information about further appeal levels and judicial review rights.

If you believe the plan did not follow ERISA's requirements, consider seeking legal advice if your appeal is denied. You can also contact the Department of Labor for assistance with your rights under ERISA at . For more information on claims procedures, see the Department of Labor publication on filing a claim for retirement benefits. Additionally, contact your plan administrator for the necessary paperwork to claim your retirement benefits. If you have questions about your plan or your rights under ERISA, reach out to the Department of Labor (EBSA) at .

Chapter 7 of ERISA discusses the responsibilities of plan fiduciaries, who are individuals or groups managing the plan. A plan must name at least one fiduciary in its written document or describe a process for identifying them. This fiduciary can be an administrative committee or the company's board of directors, typically including the trustee, investment managers, and the plan administrator.