“If I resign will I still get my retirement money I put in?”

Question: If I resign will I still get my retirement money I put in?

Terry
Harrisburg, Pennsylvania

Answer: Dear Terry:

1. With very few exceptions, money you have contributed to your retirement remains yours, no matter what. An employee who contributes money to an employer-sponsored retirement plan should never lose those monies, due to resignation or any other reason. They are held by a retirement plan “administrator” who holds those monies for the employee in a “fiduciary” capacity, which means “with the highest level of trust.” A retirement plan “administrator” who fails to return monies to an employee who has contributed those monies can be held personally liable for those monies, and even criminally prosecuted.

2. However, some retirement plans provide that you cannot have your monies back immediately, but must wait until you retire, or reach a certain age, even if you resign years before then. In these retirement plans, the contributing employee keeps his or her money, but cannot take the money out of the retirement plan until he or she retires from employment, or reaches a certain pre-set age, most commonly 60 or 65 years. Some retirement plans also permit distributions of retirement funds only during certain periods, such as January 1 to January 15 of each calendar year.

3. Many retirement plans provide that, if the employee engages in certain misconduct, the employer-contributed monies are forfeited. Examples of misconduct by an employee that may result in loss of employer contributions to his or her retirement account include (a) misconduct on the job, such as embezzlement; (b) misconduct when leaving the job, such as failing to give a certain amount of pre-resignation notice, say three or six months, or (c) misconduct after the job, such as going to work for a competitor of the employer.

4. No matter what a retirement plan provides, Plan Administrators always have some discretion in how they administer the Plan. While Human Resources representatives are usually reluctant to admit it, and few Retirement Plan Administrators like to discuss it, Retirement Plan Administrators are almost always permitted significant discretion in how they “administer” the retirement plan. Thus, if you are in need of medical care, the Plan Administrator might release your contributed retirement funds earlier than the Plan provides to permit you to obtain needed medical care. Or, if due to an illness you have a limited life expectancy, early distributions may be granted. Each retirement plan has its own set of rules, guidelines and procedures for such “discretionary” acts by Plan Administrators.

5. Though Retirement Plans are not the most interesting reading, you would be wise to obtain, retain and review your own Retirement Plan. Though they contain a good dose of legal mumbo-jumbo, a retirement plan contains the rules, guidelines and procedures applicable to your retirement monies. I strongly urge you to obtain a copy, and either review it yourself, or have an attorney or accountant do so for you.     

Terry, I hope this provides you with the information and insight you seek. Thanks for writing in.

By the way, tired of all this reading? Rather just sit back, relax, watch and listen? Consider “Resigning – The 21 Necessary Precautions,” on of our Sklover Videos On Demand. See our Complete List. Just [click here.]

Best,
Al Sklover

© 2011 Alan L. Sklover, All Rights Reserved.