I have a 401k through a previous employer. That employer recently ceased operations, and as part of that, terminated their 401k plan. As such, the employer directed myself and other employees to fill out distribution forms so that we could roll the money into other accounts (I am trying to roll it into an IRA account).
I filed the distribution form a couple months ago. After a month of waiting for the money to get to my IRA, I called the 401k plan provider and asked what was going on. They said the check must have been lost, so they claimed they cancelled it and sent a new one.
It's now been another month, and the money is still not in the IRA. I called the 401k provider again and now they say that the money is being held up by their 3rd party provider because due to the plan terminating, the money is subjected to "IRA compliance testing." They said they don't know how long that might take, but it could be up to a year. They said during that time the account is liquidated and the money is sitting in a cash account somewhere. I've spoken with other former employees from the company and they've gotten similar information.
What is the "IRA compliance testing" that they are speaking of? How long might it take? What rights (if any) do I have?
I'm very concerned that the market could improve while the money is in limbo, effectively costing me money. Even without market movement, I'm losing interest and/or dividends by not having the money properly invested.
Update: My understanding is that the 401k provider needs to submit IRS Form 5310 before they can distribute the money, and that the "compliance testing" essentially means "paperwork to get the Form 5310 complete." Is that accurate?