🚀 go-pugleaf

In article <1288@ki.com> dwatts@ki.com (Dan Watts) writes:
>Something else to remember.  The IRS changed the rules on rollovers
>as of 1-Jan-93.  If you don't have your rollover funds sent directly
>to their new home via electronic transfer [ie: you ask for a check],
>the company giving you the money from the 401K will only give you 80%
>of your $$.

Believing this to be true in the literal sense, I ran all over the place
this week opening an account and filing papers.  Turns out that, at
least the way my former employer's 401K trustee implements it, you
***don't*** have to have an EFT transfer into a new plan.

All they wanted on the form was the name of the new trustee.  When I
asked where they wanted the EFT account-transfer info, the H.R. person
said they won't do EFTs at all.  I will be sent a check in the mail for
100% of the balance, made out to the new trustee.

Apparently this is legal even under the 1-Jan-93 legislation.  What is
now illegal is for the current trustee to send you a check _in your name_
for more than 80% of the balance.

So I could've saved myself some driving.  The new account doesn't have
to be opened until up to 60 days after the check is withdrawn from my
former 401K account.

I'm wondering if there's a loophole in this.  I specified the new
trustee as "Fidelity Trust"; it could've been most any reasonable-
sounding name.  I'm sure the check will be marked 401K, but what's to
prevent you from putting it into a non-IRA investment?  (Other than,
of course, the certainty that the IRS _will_ eventually catch up with
you and take the $$$ out of your hide if there's no other way!)  Looks
like Congress must've run into a problem when drawing up this legislation;
it's probably illegal to _require_ that a transaction use wire-transfer
media.

-rich