- quote -

This question was asked recently, and the solution is simple: You needed a
financial advisor who was fluent in how to get around a CDSC on a
terminating plan.

I've been able to negotiate waivers 100% of the time for every plan
participant in every terminating qualified plan I have come across. Anyone
that recommends that you stay where you are until a CDSC has expired doesn't
know much about the QP business. I know for a fact that Lincoln will waive
them, but one must know who to call and what to ask for. =)

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

- quote -

Yes, it's "legal". And it is not at all unusual, especially when
dealing with annuities in a 401k (or IRA, etc.)

I consider this to be "after-the-fact" financial planning. The
wording allowing this penalty is in the annuity contract, and the
correct procedure would have been to read it *before* acting. Either
that, or a simple phone call to Lincoln would have disclosed it.

For future reference, I usually ask folks to find out if there is a
penalty and if so, when it vanishes. Then we merely reposition assets
within the annuity until the penalty goes away (remember, returns
reflect the asset mix, not whether the custodian is X or Y.) Sorry,
but it's a good lesson to share.


-HW "Skip" Weldon
Columbia, SC

The following was returned to the poster because it was cross-posted.
With corrected headers, it is copied below:

Begin copy-------------
From: rajendran[at]yahoo.com (raj)

I rolled over my 401k assets with a company I left earlier
to a rollover IRA account this month. And the timing was
such that (I rolled over nearly 1 1/2 years after I got
laid off) the company's 401k plan was terminated in February, just
2 months before my rollover.

The 401k custodian (Lincoln financial) applied a penalty of 4% of
the money rolled over citing that the 401k contract specified such
penalty if the funds were rolled over **after** the 401k plan
termination. And this penalty amounts to about $1000. My question
is: Is this legal?

There are several rules to protect 401k investors from squandering
their money away (such as cannot invest in options or futures etc).
Are there any rules about the penalty that can be charged by 401k
custodians?

thanks very much for your time.

raj.


End copy---------------




-HW "Skip" Weldon
Columbia, SC