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Financial question - incompetence or intentional?

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gahurts posted 4/23/2014 14:41 PM

As you all know, I am temporarily retired at the moment. I have been applying and looking for jobs and interviewing a fair amount. A couple of really good opportunities came right up to the wire only to have them go to the other guy at the last minute. Others have only made it to the phone interview stage. At the same time I have been making plans to start my own consulting and product development company. Last week I finally updated my Linked In profile to show that I am actively working as a consultant and linked my website. The phone rang off the hook for 4 hours - some headhunters seeing how they can place me in a normal job and many potential clients. I have been chasing the potential clients and some things look good but until I actually have a contract I'm keeping all avenues open.

So I am looking at finances. I have two pension plans with two different companies. I am looking at rolling them over into a money market IRA and I may have to take a distribution from the smaller of the two - yes I know the tax implications and issue with that. It is what it is and I am taking that into account.

What I want to know is why does it take so blasted long for the financial companies to do anything??

The plan with the smaller dollar amount sent me an estimate of how much I had coming to me. Then when I asked for it they said they had to work up a package and that it took 4 WEEKS to do the calculations. Today I sent off the forms asking that I get the money by May 1. NOPE! It is after April 14 so they cannot so anything by May 1 I have to wait until June 1! WHY???? What is wrong with the other 29 days of the month that they cannot do any distributions on any day other than the first of the month??

The other plan has a Qualified Domestic Relations Order attached to it from my 1st D. They gave me an estimate that already calculated the separation and what money belongs to me and what belongs to 1st xW. Yet they need 8 WEEKS to do a freaking calculation to tel me how much money I actually have and then work up a package.

If I ever told a customer they had to wait 8 weeks so I could do a calculation I would no longer have that customer. Are they using an Abacus??? Or do they have Windows 8?

When I ask the people on the phone (who I am sure did not set the policy) they can only say that "this is how it is set up".

Can anyone help me to understand what these delays are for and why they are built into the systems?

MovingUpward posted 4/23/2014 17:38 PM

Are they using an Abacus??? Or do they have Windows 8?

8 weeks, hmmmmm. I'm going to say they're using windows 8. An abacus would be much faster.

nowiknow23 posted 4/23/2014 17:47 PM

I know it's frustrating. The fact is, it's universal. That tells me it isn't incompetence, but just the way these things go.

I won't pretend to know the why of it. Maybe a retirement/banking guru can shed more light on that.


alphakitte posted 4/23/2014 18:27 PM

Generally, it takes ths long when the company you worked for is small and the current past, and current, employees' funds are in a pooled account, rather than seperate accounts. Even if the funds are in seperate accounts for each participant, sometimes, the plan is only administered at the end of every statement period (usually 30 days, but sometimes every 90 days, and on rare occasions once a year).

The reason for this is that the assets need to be valued before your portion can be calculated. Most plans are valued automatically the end of every month by the financial firm holding the assets. The administrator of the plan then calculates your portion. Valuing the assets daily, or just when a participant wants funds, is extremely expensive to the participants.

In summary? It keeps costs low, to you, the participant.

rolling your funds out to an IRA, managed by you, would allow you access any day you chose (or 3days following your request, depending on what you are invested in and allowimg for your signature to be received requesting distributions).

gahurts posted 4/24/2014 06:51 AM

Both of these are with large, multinational companies. The smaller of my two accounts are with an investment company but the other is managed by the company themselves.

The reason for this is that the assets need to be valued before your portion can be calculated. Most plans are valued automatically the end of every month by the financial firm holding the assets.

Thinking about it, I guess I can understand this. I would still think that there would be an algorithm or even a spreadsheet of sorts that could update the assets of each account automatically.

I get frustrated when the only answer people give me is that this is how we do things.

alphakitte posted 4/24/2014 07:13 AM

If the plan is flexible in that induviduals can increase, decrease, and withdraw, funds at will, and if the funds are pooled then a spreadsheet, or algorithm wouldn't ever be current. ERISA law requires that the calulations be 100% accurate.

Employers elect options, and flexibility, to keep the costs low for the participants.

The answer isn't because this is how things are done. The answer is that options are chosen in the participants' interest.

Ask your previous employers' human resources benefit area for the phone numbers of the administrators of your plan, or log onto the administrator's web sites and pose this question for a more detailed answer to your question.

fireproof posted 4/24/2014 21:03 PM

Can you take a loan against it?

Unless it is an emergency I would take a second job etc before touching retirement. You get hit and then you have to count it as income.

Good luck!

sisoon posted 4/25/2014 05:05 AM

If they're defined benefit plans with COLAs, I'd be very hesitant to roll them over into an IRA. They'll probably do better long term than you will.

gahurts posted 4/25/2014 08:18 AM

I'm rolling them into Money Market IRAs now so that I can have access if I need it. Once I get some stability and I come either in the form of a job or in paying clients then the financial manager at my bank will transfer them into some better investment options that will grow the money faster but if course restrict my access.

Fireproof, I am accessing it because I need it for income. I understand the tax implications and the risk I'm taking. There no chance of a second job, I need a first job which hopefully will be coming about soon if some of the potential clients I've spoken to actually turn into actual clients AND they pay their bills on time.

ETA: The loan option ended when I left the company.

[This message edited by gahurts at 8:19 AM, April 25th (Friday)]

fireproof posted 4/25/2014 21:23 PM

Good luck with your clients!

I don't know exactly what you do but could you contract or make yourself a business to contract. If you are new to contracting you might want to join a temp/contracting company while you are establishing a client base.

Some people in the Corporate area choose to be contractors because they can charge hourly and make more than a permanent salary position.

I would try multiple avenues at the same time- you can do it!

gahurts posted 4/26/2014 06:52 AM

Thanks fireproof. That is exactly what I am doing. I have a website, e-mail address, PO Box, business cards. I am leaving tomorrow for a conference in Las Vegas at which I intend to do major networking and hope I can secure a few clients to move forward with.

fireproof posted 4/26/2014 07:41 AM

Good luck on your trip!

Before things get too tight check into the temp/contracting firms too. You can always say no to the position but it could put your foot in the door and it might help with any start up costs.

Just my thoughts because after all of this divorce etc multiple avenues is a way to go especially rebuilding.

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