401, k?

Let me start with this disclaimer: I am not an accountant, lawyer, or other financial expert.  Please do not interpret anything that follows as direct financial advice.  When in doubt, please seek professional advice.

So, I have a penchant for working for small or risky companies, which means I’ve had to change jobs fairly regularly.  In the past 13 years I’ve worked for six different companies, three of which collapsed while I was working there and two of which had the decency to remain in business for at least another year or two after I left.  Actually, one of those latter two existed for several more years and then was bought by a larger company, but was basically absorbed to the point of not really existing as an entity any more.

Pretty much every job I’ve had offered a 401k, of which I partook to the advice of my father, and well, pretty much the rest of the world.  In some job changes I thought to roll my old 401k into the new one, in others I did not.  By the time I reached 38 Studios I had a few different accounts trailing along.  I decided this was the time to be responsible and get my financial house in order.  I rolled everything into 38’s 401k.  Perhaps you can see where this horror story is going…

38 Studios went out of business in May.  It is now January, and our accounts are still frozen due to being audited as part of the bankruptcy proceedings.  The good news is that it appears all the money 38 was supposed to put in there is actually there.  The bad news is, I can’t touch it in any way, including all the money from previous jobs I rolled forward.

This has been a hot topic of debate on the Facebook ex-38 group.  And it’s on my mind because we’re actually starting to finally see some motion, though frankly until I can get access to my account I’m not holding my breath.  For me, it’s not too terrible given that I found another job, I don’t need access to that money right this very minute.  I know that for some who are still looking, access to that money would be a real life line.

What have I learned from this?  Well, if future companies offer a 401k with some form of matching, I’ll still partake, but there’s no way I’ll be rolling anything forward ever again.  Once I have access to the old account I’ll be looking into an IRA or other such personal account to move my money into.  Should I find myself switching jobs again the future, I’ll be sure to roll any old 401k into that personal account, not whatever it is the new company offers.

Here’s an amusing addendum.  That one company that lasted the longest and got bought rather than going out of business, which by the way I was sure would be the one to collapse in utter failure, they didn’t offer a 401k.  They had some weird “Simple IRA” thing instead.  When I rolled forward everything into 38 that one was somehow different to the point that it couldn’t be rolled forward.  There wasn’t very much money in it, and it was being charged annual fees, so I basically forgot about it.  I assumed it would eventually cannibalize itself from those fees, or I would bother to sit down and figure out how to cash out and just pay the awful taxes out of what little was left.  It just wasn’t enough money though for me to really give it much thought.  Turns out, it’s been a champ for the past five years, earning enough interest to actually go slightly up in value.  Now it’s my consolation prize — a few hundred dollars I can actually get access to if need be, or perhaps the seed to my future savings.  I’m going to let it sit until the 38 401k unfreezes, and then, well, then I’ll be looking for a financial adviser, because clearly I don’t know what the hell I’m doing.

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3 Comments

  1. That 401(k) nonsense is ridiculous. 🙁 I went the roll-over IRA route this time around and it seemed to work out pretty well. At least, you have a lot more control over the money, and it’s another account you can fund with tax benefits.

    Sometimes I get the sense that it’s all just a scam though. 401(k)s, IRAs, money in general. Workers of the world…

  2. Ouch, cruddy story. Hope that clears up soon.

    When you get a financial adviser, make sure it’s an independent adviser that you’re paying to get advice from. (Lots of mutual fund companies have staff called free “advisers” who are basically sales agents.) In particular I saw I guy in Boston named Rick Miller years ago, lined me out when I was in a similar state, can’t recommend him highly enough (http://www.sensiblefinancial.com/).

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