Author Topic: 401k - CARES ACT - Employer not playing nice  (Read 1126 times)

Bigjones

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401k - CARES ACT - Employer not playing nice
« on: September 01, 2020, 11:19:06 AM »
Hey guys, i have a question about the CARES ACT and my employee 401k.  Im fully vested and qualify to pull the money from my 401k without penalty.  My thought was that i could pull my 401k funds out and roll them into my IRA. Where the fees are VERY CHEAP, and have a TON of choices vs my 401k where my fees are crazy high and my choices are incredibly small. 

When i inquired i was told by the third party plan manager that it would require a amendment to the plan and they wernt interested in doing it.  Is this in fact true ?  Would it be the plan that takes the fee out of the government ?  Do i have recourse ?

rantk81

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Re: 401k - CARES ACT - Employer not playing nice
« Reply #1 on: September 01, 2020, 11:25:24 AM »
What you're attempting to do is not a CARES Act withdrawal.

The CARES Act permits a withdrawal that is actually classified as a distribution from the plan.

What you're attempting to do is known as an "in service rollover" -- and your employer is correct -- they would need to modify their plan to support this feature. Most plans do not support this feature in my experience.

Mrs Brightside

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Re: 401k - CARES ACT - Employer not playing nice
« Reply #2 on: September 01, 2020, 11:26:52 AM »
They aren’t required to let you make a withdrawal. And you aren’t even withdrawing but trying to rollover. The CARES Act allows — but does not require — employers to offer special in-service coronavirus-related distributions to qualified individuals until Dec. 30, 2020.

https://www.mercer.com/our-thinking/law-and-policy-group/delving-into-cares-act-relief-for-retirement-plan-participants.html

Bigjones

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Re: 401k - CARES ACT - Employer not playing nice
« Reply #3 on: September 01, 2020, 11:28:13 AM »
Thats what i was curious to know, if they were in fact required or not.  Thanks

ixtap

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Re: 401k - CARES ACT - Employer not playing nice
« Reply #4 on: September 01, 2020, 11:28:37 AM »
The CARES act removes the penalty, but if your plan didn't allow partial withdrawals prior to retirement age before, the CARES act does nothing to add that feature.

Your employer isn't being uncooperative, they are refusing to jump through additional hoops with additional costs attached.

Paul der Krake

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Re: 401k - CARES ACT - Employer not playing nice
« Reply #5 on: September 01, 2020, 02:53:26 PM »
Yup, employers aren’t required to let you make a CARES withdrawal. I suspect the vast majority is too busy running with around with their hair on fire to implement something that only a small fraction of their employees even knows is an option.