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A few months back, the startup my wife works for was bought out by a big company. Everyone was thrilled, of course, and it was a great moment for the whole team. Soon after the logistics of the buyout were announced, it was made clear that everyone would quit their job at the current company and take a new job at the new company. That was all done and everyone started their new jobs within a couple weeks of the announcement.

Perfect, I thought! This is a great opportunity to roll over her 401k to her IRA so we wouldn't be locked in to the limited funds the brokerage offers. However, a few days after she put in the paperwork for the rollover, the company announced that all rollovers would be on hold until the post-buyout audit was completed. That sort of seemed reasonable, except...

It's been a couple months since then. No timeframe for the audit was announced, nor has one been given in response to her repeatedly asking. I'm a little surprised. Not to put too fine of a point on it, but is this even legal? It's our money, not the company's, so it seems awfully questionable.

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    Is a portion of the 401k unvested? – Hart CO Oct 8 '18 at 1:15
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    Questions about legality should be asked on law.SE. Be that as it may, absent the actual details of what "bought out" means, it may be that the startup's 401(k) plan was merged into the acquiring company's 401(k) plan and there is no opportunity for a rollover at all, and that's what the post-merger audit is revealing. – Dilip Sarwate Oct 8 '18 at 10:24
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    you say "it was made clear that everyone would quit their job at the current company and take a new job at the new company. That was all done and everyone started their new jobs within a couple weeks of the announcement" did they actually quit, and was there an actual period of unemployment? The mergers and splits I have been in have never had a period of unemployment for the regular employees. There were employees who lost their job in the process, but those actions were done before the merger or after the merger. – mhoran_psprep Oct 8 '18 at 11:20
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    @pbarranis Okay so I doubt any 401k custodian shenanigans. It may just be that the big company has a left hand which doesn't know what the right hand is doing. Additional data point, when the startup I was with was bought out, it was the same as your wife, one day old company, next day new company. It did take a while for the 401k to be released (a few months) when I then rolled it over into a IRA. Only suggestion is to check your rights under ERISA and ask new company HR. – Morrison Chang Oct 8 '18 at 22:17
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    I am about 99% sure that the oldcompany 401k plan is NOT being merged into the newcompany plan. It's pretty clear oldcompany and newcompany wanted a clean break. The time this happened to me, existing employees lost any unvested company match, which was sad, but we were able to roll over the balance to an IRA, which was good because the oldcompany 401k was pretty bad. (The newcompany 401k was only slightly better.) Anyways, has your wife pestered HR and/or payroll about this? If so, what did they say? If I were her I would start asking once a week until I got an answer or at least a timeline. – stannius Oct 9 '18 at 18:22
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According to https://www.investopedia.com/ask/answers/100314/what-does-it-mean-if-my-401k-plan-has-been-frozen.asp there is no legal restriction on the length of such a freeze.

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