Q: I live in Colorado. Is it legal for a prior employer (5 years ago) to take money out of 401k without permission?
Hello, I am asking on behalf of my father who worked for a company approximately 5 years ago. He was laid off due to the company selling the division. When he worked there he had a 401K account with an employee match deal. 5 years later (as of yesterday) he discovered that the company made a withdraw of 8,400 from his 401k on 7/11/17. They did not ask permission nor did they notify him. Is this even legal considering he has not been an employee of theirs for 5 years?
A: Generally,employers (current or past) are not allowed to "raid" individual retirement plans. However, calculation errors or limited other causes may allow withdrawal. Usually notice is required. A lot depends on the employment and 401K contract. For specific review you will need to pay an attorney to review all the documents and advice on the best course of actions.
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