Author Topic: Any advice dealing with a 401(k) from bankrupt company?  (Read 2699 times)

Dollar Slice

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Any advice dealing with a 401(k) from bankrupt company?
« on: August 24, 2015, 11:58:17 AM »
I'm trying to help someone out... he has a sizable sum in a 401(k) plan currently held by ADP from a company he used to work at. I had helped him fill out all the paperwork to open an account at Vanguard and roll his money over into an IRA. ADP claims that he is still an active employee of small company X (~6 employees), which was seized by the bank in April 2014 for non-payment or non-compliance or something (they had a big loan with the bank). Assets were sold, the company ceased operation (we're not sure exactly what legally went down in terms of bankruptcy, but all employees were told "this is your last paycheck" and that was the end of it). The owner was very ill (cancer) and I believe that things may not have been done properly, e.g., not filing paperwork and so on.

This former employee hasn't heard a word from the former owner since that day. He's moved out of state for a new job somewhere else. But he can't get his money from ADP because they say he's still listed as actively working for Company X, and you can't terminate yourself, you have to have the plan administrator do it. The plan administrator is MIA and we don't know how to contact him.

I'm seeing a lot of complicated recommendations involving the Department of Labor or going to court... obviously no one wants to deal with that stuff if they don't have to. And this person in particular is a little... difficult? I dunno. He is convinced that ADP is going to keep his money and he'll never be able to access it again. And he has very little tolerance for trying to sit on the phone and talk this stuff through. He just gets flustered and hangs up the phone. So I'm trying to figure out the easiest and least stressful way to do this, and I was thinking someone here might have already gone through the process and could have some tips.

So - any advice?  :-/

matchewed

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Re: Any advice dealing with a 401(k) from bankrupt company?
« Reply #1 on: August 24, 2015, 12:29:17 PM »
There is going to be shit all your friend can do to convince ADP the company no longer exists as long as he's talking to first level customer service. He needs to contact the head(s) of that now defunct company whether or not they were/are ill. I'm surprised that your friend can't find someone from a little over a year ago from a company of six people. Other individuals must have the same problem as him. Alternatively escalate this through ADP, the whole keep asking for someone that can help him.

Other thoughts is obtaining evidence of the bankruptcy of the company as that would probably be public record given the information you've outlined.

h2ogal

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Re: Any advice dealing with a 401(k) from bankrupt company?
« Reply #2 on: August 24, 2015, 01:34:19 PM »
All it may take is an email from the former company owner (or his wife or bookeeper) to ADP saying Mr. X is no longer an employee.

We used a large national payroll provider for DH's small business and that was all it took for me to get someone off the payroll.

If the owner was ill it is likely he gave someone temporary power of attny to do his business paperwork...a wife most likely.

Dollar Slice

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Re: Any advice dealing with a 401(k) from bankrupt company?
« Reply #3 on: August 24, 2015, 03:00:40 PM »
I am getting a lot of resistance on the "contact the old boss" thing for psychological reasons - I guess there was some pretty bad stuff at the end, like "surprise - you won't have a job next week" combined with the guilt about his illness... they worked together every day for 8 or 10 years and it all ended very poorly. The person I'm helping said the owner also owed him money personally that never got paid back, unrelated to the business. Ugh...

Unfortunately the *rationally* easiest thing is not always the *actually* easiest thing... but I'll try to convince him to at least send a letter.

matchewed

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Re: Any advice dealing with a 401(k) from bankrupt company?
« Reply #4 on: August 24, 2015, 04:19:36 PM »
I am getting a lot of resistance on the "contact the old boss" thing for psychological reasons - I guess there was some pretty bad stuff at the end, like "surprise - you won't have a job next week" combined with the guilt about his illness... they worked together every day for 8 or 10 years and it all ended very poorly. The person I'm helping said the owner also owed him money personally that never got paid back, unrelated to the business. Ugh...

Unfortunately the *rationally* easiest thing is not always the *actually* easiest thing... but I'll try to convince him to at least send a letter.

Sorry your friend needs to grow up and give this individual a call. A passive letter is not the way to go. No one at this point can help your friend not even you if they can't take the basic steps to help themselves.

Beaker

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Re: Any advice dealing with a 401(k) from bankrupt company?
« Reply #5 on: August 24, 2015, 04:29:26 PM »
Other thoughts is obtaining evidence of the bankruptcy of the company as that would probably be public record given the information you've outlined.

This might be as easy at hitting up the website of the Secretary of State for wherever the corporation is/was registered. Alternatively the clerk might have records from the bankruptcy.

Dollar Slice

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Re: Any advice dealing with a 401(k) from bankrupt company?
« Reply #6 on: August 24, 2015, 04:53:40 PM »
Sorry your friend needs to grow up and give this individual a call. A passive letter is not the way to go. No one at this point can help your friend not even you if they can't take the basic steps to help themselves.
Probably true... but the counseling he may or may not need is above my pay grade ;-) I'm just trying to gather the facts so I can lay it out for him. E.g., "Calling him and getting him to update the records is best, if you can't bring yourself to do that you could try sending e-mail or a letter. If you get no response, then you'll have to try to prove the company is bankrupt and this may involve going through government channels" etc.

Dicey

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Re: Any advice dealing with a 401(k) from bankrupt company?
« Reply #7 on: August 25, 2015, 09:51:28 AM »
Good for you for taking this on AND for setting limits. I hope this story ends well for everyone.