"raj" <rajendran[at]yahoo.com> wrote:

- quote -

Refer to your 401(k) plan document and your plan
administrator.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Boston, MA 02109

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I rolled over my 401k assets from my earlier company 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 penaly 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.

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