IRA Rollover

Question: 401K Cashout?

I received a letter from an old employee (10 year associate, left two years ago) saying I either had to rollover my 401K to an IRA or employer plan. I have over $10k in the account. I was under the impression they had to maintain it by law. Did the law change? Links would be appreciated.
Thanks

Answer: depends…is the plan terminating? If not, then yes they have to maintain it. The rule is that if the account is under $1,000 then they can cash you out without your approval with a cash payment. If the accoutn is over $1,000 but underr $5,000 then they can cash you out without your permission but it has to be in rollover form (ie rollover to IRA). If the account is over $5,000 (or ever has been over $5,000) then they need your permission to cash you out.

So, since you have $10k they can’t kick you out. But they can charge you a fee for doing staying. The fee can be no more than it costs them to maintain your balance. Check the Summary Plan Description for this. If it’s not in there then they can’t do it.

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