In a 401(k) freeze, an employer tem꧑porarily halts all new contributions to and withdrawals from its 401(k) plan.

You are most likely to experie🌃nce a 401(k) freeze following a merger, while the new company determines what to do with the 401(k) plan it has inherited. You can wait to see what the company wꦫill do, or you can roll over your funds into an individual retirement account (IRA).

What a Frozen 401(k) Means for You

If your 401(k) has been frozen by your company’s management, you will still retain all of the rights you had prior to the freeze. Your existing investments will still grow or shrink based on their market performance, and your retirement savings will maintain their tax-advantaged status. The only difference👍 is that you cannot a🐻dd new funds or make withdrawals from your account.

In most cases, you can change the composition of your existing retirement portfolio and shift assets from one investment to another. You should also continue to receive statements in accordance with 澳洲幸运5官方开奖结果体彩网:Employee Ret🐼iremꦆent Income Security Act (ERISA) guidelines.

What May Happen to Your Frozen 401(k)

There is no legal restriction on the length of a retirement plan freeze. Your 401(k) plan may🍌 be frozen indefinitely until the new employer decides what to do with it. The new management has three primary options:

1. Merge It into Another Plan

The new employer may choose to merge your old plan with its own 401(k) plan. In this scenario, your retirement assets are rolled into that 401(k) plan, after which your account is unfrozen. Because 401(k) plans are highly complex and often very different, this can take a long time to execute proper꧋ly.

2. Terminate the Plan

The new company cannot terminate your plan until it receives a letter from the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) indicating that everything has been properly handled. After termination, your contributions, vested matches, and earnings are all returned to you.

If your new employer’s 401(k) plan allows for rollovers, you can opt to have your retirement funds rolled into that plan. Note that if you are under age 59 ½, you must complete your rollover within 60 days in order to avoid a tax penalty.

3. Continue the Plan

In this case, existing employees from the acquired company may continue to access the legacy plan, while any new employees will most likely be directed into the new company’s 401(k) plan.

Rollover to an IRA

You can also opt to move your funds into a 澳洲幸运5官方开奖结果体彩网:rollover indi👍vidual retirement account (IRA) instead of accepting any of the above three scenarios. If you use your old 401(k) money to establish a rollover IRA, you'll keep the tax-advantaged status of those funds and not be hit with an early withdrawal penalty. To protect against tax penalties, be sure to arrange for a 澳洲幸运5官方开奖结果体彩网:direct (trustee♍-to-trustee) transᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚfer of your funds.

The Bottom Line

Under certain circumstances, an employer can freeze your 401(k) retirement plan, preventing you from making contributions or withdrawals. However, the money is still yours, and will continue to gain or lose value depending on changes to the market. The frozen plan may eventually be shifted to a new 401(k) provider, or you may be able to roll the funds over to a new plan.