The Law and Your 401k

As I indicate in my Welcome Page, I am retired and use this forum to express my perspective of things I deem noteworthy.  I recently had an experience that left me quite disturbed and I imagine others have been affected in a similar manner.  By Law, when you turn 70 and a half you are required to start drawing from your social security and what is called a Minimum Required Distribution from any other retirement accounts you may have, 401k, IRA, etc.  You may elect, in order to supplement your income to take set up monthly withdrawals.  In addition to the monthly withdrawals, you may also take a quarterly withdrawal. To further set the stage for my discussion let me explain.  I have worked for various companies during my career.  I have always contributed to the company-sponsored retirement savings plan and I always contributed the maximum matching contribution.  In other words, if the company would match my contribution up to 4%, I contributed at least 4%.  If they would match more I contributed that amount.  Why not?  That maximized my Retirement Savings.  When leaving an employer I had the option of rolling the funds into an IRA or a new employer plan or leaving it where it was. I had one employer I worked with for only a short period of time, about a year and a half.  At the time they had me working overseas opening a new office for them.  When the market took a sudden downturn they chose to close the office and let me go.  They also wanted me to abandon the clients with whom I had entered into agreements on their behalf.  I felt this was not appropriate and in the end took over consulting directly with these clients.  The company was Canadian but paid me as a US Citizen through a branch they had in the US.  I tried reaching out to them on several occasions to do something with my Retirement Savings but was unsuccessful in finding their US Ofice.  However, when I turned 70 and a half they contacted me to remind me I was required to take a minimum distribution from the account.  (How they tracked me down I don’t know.  Especially since the company had changed hands several times and is now part of a large English company.) I recently chose to take a quarterly distribution from this account due to unexpected circumstances.  I called the retirement portfolio manager, a firm I have dealt with before with other 401k’s and made the request filling out all the required paperwork.  I was told it would take 5-7 business before I would receive a check.  I knew this to be the case from my past experience.  However, seven days went by and no check so I went online to look at the status of the withdrawal.  Online I see the filing of the paperwork and then it says “Pending Employer Approval.”  Wait a minute, I am retired.  What employer approval?  I am 100% vested in the account, why do I need employer approval?  So I call and am told that this employers plan requires approval and I should wait a few days.  I wait.  Nothing happens, two weeks go by, still nothing.  After speaking with managers and supervisors and getting angrier by the minute, I call the Department of Labor, the government assigned department responsible for oversight of these types of plans, hoping to get some resolution. Much to my chagrin, I am told employers past or present are responsible for administering their plan and have up to 90 days to approve a withdrawal request.  What?  Why?  It is my money invested in the plan.  The money isn’t even in their hands, it is invested in various funds per distribution I control.  This doesn’t make sense.  Sorry sir, that is the law. This is one law I believe needs to be changed.  I can understand an employer wanting to have a say if a current employee is not fully vested but I see no reason why an employer should have approval when a former, retired employee who is full vested wants to withdraw funds.  Let alone be able to take 90 days to approve the withdrawal.  Most retirees live on relatively fixed incomes and when they have a need to access their money they should have the right to immediate access.  This is nonsense and is one law I want to see changed.  I have reached out to organizations that may help to this end and I hope you do as well.