If your employer has delayed your 401(k) distributions, there may be a legitimate explanation, but the company is required to let you know why in writing.  But before you do that, it's crucial to have a good understanding of how your plan works.

Read Plan Documents

A good place to start to understand why your distributions may have been delayed is to read the materials that spell out the provisions of your plan. Your employer or the plan administrator should have provided you with a copy of the 401(k)'s summary plan description (SPD). If you can't find your copy, contact your employer and ask for a replacement.

Key Takeaways

  • Employers are required to provide participants in a 401(k) with a summary plan description, which outlines the terms of the plan.
  • You can ask your employer to provide an explanation for delaying your distribution; companies are required to do so in writing.
  • There may be legitimate reasons why 401(k) payments are delayed, such as your eligibility.
  • If you believe your employer is not complying with the provisions of the plan, contact the Department of Labor (DOL).

A copy of the plan's SPD may also be obtained from the DOL by writing to:

  • The Department of Labor, EBSA, Public Disclosure Room, Room N-1513, 200 Constitution Avenue, N.W., Washington, D.C. 20210

They may charge you copying fees, which are usually a minimal amount. You can also visit the Employee Benefits Security Administration’s website and go to Ask EBSA.

The SPD is required to include an explanation—in non-technical terms—of the plan provisions, such as your benefits and rights under the plan, including when you are eligible to receive distributions.

The Employee Retirement Income Security Act (ERISA) requires plan administrators to provide participants with an SPD.

When an employer makes changes to a 401(k), regulations mandate that it must notify all participants in writing by giving them a revised SPD or a summary of the modifications and how they affect the plan.

Ask for an Explanation

Alternatively, you may ask your employer to provide an explanation for refusing to honor your request for a withdrawal. In fact, you must be given an explanation in writing.

If you feel your employer is not complying with the terms of the plan, you may contact the DOL toll-free at 1-866-444-3272 and ask to speak with a regional office representative near you, or you may contact your regional office.

Legitimate Reasons for Delayed Distributions

There are legitimate explanations for why distributions could be delayed, which is why it is important to read the plan's SPD. The reasons may include the following.

1. Eligibility

You may not be eligible yet to receive distributions. For instance, the plan may require that participants reach a certain age before they are considered eligible to receive a distribution. This age requirement can apply even if you are no longer employed with the company.

2. Payment Frequency

The plan may make payments only at a certain frequency, such as quarterly. If you requested a distribution in mid-January, then you may need to wait until March 31 before you receive the requested amount.