A few years ago, I had an internship, and had to set up an account with the employer's retirement fund company.

A couple of years after leaving the company, I was closing out old accounts, and realized there was money in the 401k/403b from that job. I didn't think it was vested, but I called the investment company (Company A) to see about closing out the account. They assured me that the money was vested, and I could move it and close the account. I was dubious, and called again, and was told the same thing. So I moved it to my main IRA at investment company B.

Now, a couple of years later, I got a letter from the employer saying the money was contributed in error, and they need it back. They put in a "letter of indemity" requesting the return of funds to investment Company A, who passed it Company B.

Company B informed me that they won't take out the money without my permission, and said they can't return it directly to Company A anyway.

I'm wondering what my options are. It seems to me that the fault here is with either the employer or investment Company A. If it was just a matter of returning the money, I'd be okay -- it's not a life-changing sum (~1.5k). But it also makes a mess of IRS forms and excess contribution fees, accumulated over years.

Can I just refuse to return it? Can I return the money, but insist that Company A or the employer help sort out the IRS forms/fees?

  • 2
    Talk to a lawyer – Daniel Jan 15 '20 at 2:58
  • 1
    Did you contribute anything to the 401(k) or was all the funds from the company? Do you have access to the original documents that show the vesting schedule? – mhoran_psprep Jan 15 '20 at 10:49
  • As Daniel says, talk to a lawyer... but just refuse until you do. They'll spend more than $1500 chasing you for it; just don't spend more than $1500 defending it. – Peter K. Jan 15 '20 at 15:41
  • It was all company funds. I don't have the vesting info anymore, but it's likely it was indeed a mistake; that's why I was so doubtful about moving it initially. – ec92 Jan 15 '20 at 18:41

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