Participant Disclosure Document (Return of the Job from Hell)

January 2, 2017 10:00 AM

Good morning MeFi, I've got an email I just received from a previous abusive employer from whom I was terminated without chance of rehire. It appears they think I owe them money for participation in their company-sponsored 401K. Should I be worried?

The letter states:

Please find the enclosed participant disclosure document from $401K_Provider. The Department of Labor requires us to send this letter to all terminated participants who have balances.

They don't explicitly state what I owe them. This letter doesn't seem to be a legal threat, just a little FU for the holidays. Should I reach out to a lawyer? I've a friend who'd be willing to give me a consult for cheap, but this letter reads like bureaucratic babadookery.

posted by endotoxin to Work & Money (14 answers total)

Please find the enclosed participant disclosure document from $401K_Provider. The Department of Labor requires us to send this letter to all terminated participants who have balances.

I don't see why you think this means they're saying you owe them money. Did you leave something out here?
posted by jon1270 at 10:04 AM on January 2, 2017 [12 favorites]

You put money in a 401(k) while you were employed there. They are required by law to send you a notice that you still have money in your 401(k), so you don't forget about it. This is them doing so. Why do you think they think you owe them money?
posted by kindall at 10:05 AM on January 2, 2017 [28 favorites]

Are you sure they don't owe you money?
posted by willbaude at 10:05 AM on January 2, 2017 [7 favorites]

What does the rest of the letter state? Based on just that paragraph I'd assume it meant you have a (positive) balance, not a balance due, and that it would include information about your options now that you no longer work for them.
posted by jshort at 10:06 AM on January 2, 2017 [5 favorites]

The company sponsored 401K was probably (definitely?) actually administered by a financial institution/bank. Think Vanguard or Empower, for example. The bank has likely also been sending you letters/emails about your 401K over the entire time that you participated in the plan.

Find some appropriate paperwork and call the financial institution. They'll be able to tell you what's up, and give you the best advice* about your options for the account (you could probably roll it over into an IRA or something with lower fees, for example).

*best advice as in: "this is the full list of your options," not necessarily best advice as in: "this is the best option for you."
posted by sparklemotion at 10:11 AM on January 2, 2017 [2 favorites]

Best answer: I agree this is just boilerplate stuff that they have to send. However, the disclosure may include information about fees that you will be responsible for going forward (such as rebalancing) that your company covered while you were an employee but will not in the future.

Regardless, unless it's a really good plan with good funds, you should consider rolling it into an IRA.

Find some appropriate paperwork and call the financial institution. They'll be able to tell you what's up, and give you the best advice* about your options for the account (you could probably roll it over into an IRA or something with lower fees, for example).

*best advice as in: "this is the full list of your options," not necessarily best advice as in: "this is the best option for you."

The current institution may not provide a complete list of options, either out of malice or lack of knowledge on the part of the CSR. Many 401(k) providers are objectively bad performers and stay in business in part because companies choose them based on low cost for the company (but bad options for the employees) - those have no incentive to be helpful in deciding what to do and their fiduciary duties are muddy, especially with the regime change. There's many good objective resources online about how to select a provider to roll a 401(k) to and how to do it. The /r/personalfinance FAQ is a decent starting point.
posted by Candleman at 10:24 AM on January 2, 2017 [3 favorites]

Pretty sure you don't have to do anything here.
posted by kat518 at 11:15 AM on January 2, 2017 [1 favorite]

Yeah, by "balance", I think they mean you have money in an account there, not that you owe them money. That would be "balance due."
posted by MexicanYenta at 11:29 AM on January 2, 2017 [3 favorites]

Best answer: The letter is just telling you that the 401k plan is holding your money (that you contributed when you were an employee -- this is normal, and fine, and expected). It is still your money, just a protected-from-taxes type of money, and so you can and probably should 'roll it over' to a new, self-managed account elsewhere. Read more about this here.
posted by so fucking future at 11:39 AM on January 2, 2017 [7 favorites]

Nthing that this is standard boilerplate-speak for "you have money in a 401k plan through Previous Employer, and now that you don't work for Previous Employer you need to decide what to do with it." Assuming there's not a major part of the story being left out, you're not being threatened or harassed.

This IRS overview of your four general options is good. Note that if you have a balance under $5000, you may not have the option of simply leaving your money in the current plan. Also, note that depending on how long you worked at Previous Employer, there may be some issues of vesting for you to be aware of.
posted by the return of the thin white sock at 12:15 PM on January 2, 2017 [2 favorites]

Yeah, contact the 401 administrator about a rollover.
posted by I_Love_Bananas at 1:28 PM on January 2, 2017 [1 favorite]

Response by poster: Thanks Gang! I thought I /had/ rolled the previous funds into an IRA, hence my confusion. I did request as such from the company a few years back, once I'd had enough time away from the job that I could call and request information without having a full-blown panic attack. I suppose perhaps there were earnings that occurred after I'd transferred the existing balance into a Vanguard account? Anyway, the letter says that it's there to provide me with "Sufficient information to understand the administrative, transactional, and investment related costs associated with contributing to a participant-directed retirement plan." I suppose my work experience is coloring my perception of this letter as a shake-down.

Thanks Candleman, I'll give that sub a look later this evening.
posted by endotoxin at 2:08 PM on January 2, 2017

This year nearly every one of our retirement plans (three, because my wife has two jobs) has changed its fees. Depending on the fine print they may be telling you of a new maintenance fee and not just the usual transaction fees, so it's worth reading closely. But yeah, if you've got another plan you can roll it into (and your new plan has more favorable returns and/or fees), you should do that.
posted by fedward at 4:08 PM on January 2, 2017

I suppose perhaps there were earnings that occurred after I'd transferred the existing balance into a Vanguard account?

One of the more amusing features about the fully computerized future we're all living in is its complete lack of human-mediated common sense.

I'm still getting regular paperwork about a parcel of shares my father owned before he died. The value of the company concerned completely tanked after Dad bought in, and his parcel is now worth about 18 cents. It's not worth my time to deal with it but the paperwork just keeps on turning up.
posted by flabdablet at 10:41 PM on January 2, 2017