A Frozen 401(k) - Burns This Investor

Q. My question involves a 401(k). Back in August of 2002 I quit my job with company A. At that time I had a 401(k) which I was told I could leave, cash out or rollover. I left it. I have now decided I would like to remove it. The 401(k) is invested through #### so I called them. They told me I could not do anything with it because company A had put a freeze on the account and that I would need to contact them.

So I called company A, who informed me that Company A had been sold early this year and that their lawyers had recommended that they freeze all 401(k) plans until they had received some type of consent from the IRS, This should happen by Sept, 30, 2005. Is this legal? I am not an employee of company A. My account is listed as terminated and fully vested. Why can company A put a freeze on it? It's not their money is it?

I am the one who made contributions every payday.

Please let me know what you think? Should I send them a letter and ask them for something showing that this is legal? Any help would be great.

A. This is a tough one. I can't say I have a lot of experience in this area.

I imagine that the reason the freeze has been placed on the plan is because the lawyers are concerned about insider sales of the company stock during the process. If that's the case, the question is whether or not any of your holdings are in that stock. If not, I can't see why they wouldn't allow the transfer.

I agree that you should contact them and try to talk with someone in charge of the plan. Keep going up the chain till you feel like you have an answer. If you know an attorney (and don't make any progress), it might be worth having an attorney give them a call. Somehow, an call from an attorney always seems to get through to the right people....

This is just one of many examples why it is good to transfer a 401(k) as soon as possible--whether from retirement or separation from service. This is also why I don't recommend people roll the assets from one company plan into the company plan of a new employer.

Your posted comments on this and other questions are welcome.
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