If I was laid off 6 years ago because of reduction in workforce, when can I make a withdrawal from my retirement plan?

Every job I’ve ever had and contributed to a retirement plan has allowed me to withdraw everything because of separation of service. However, the plan’s administrator states that I cannot withdraw because I am not yet 65. Do they have the right to keep my retirement money? About a month ago, I received paperwork stating that I could take my retirement in a lump sum. However, the “do by” date was 5 months ago. According to the paperwork they gave an “approximate” balance of over $7,000. When I checked several weeks ago, it was a little over $5,000. Why can’t I withdraw it? I was laid off.

Asked on July 21, 2015 under Employment Labor Law, Oklahoma


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If it is a 401k, you have the right to withdraw the money, but will pay a penalty as well as have taxes withheld--the two together (penalty plus taxes) will be around 35-45% of the amount. If it is a 401k and they won't let you do this, you could, if necessary bring legal action (a lawsuit) to get the money, since they have to follow federal law on the subject. You could also contact the Employee Benefits Security Administration (EBSA) at the federal Department of Labor (DOL) for information and assistance.

If it was a pension plan, however, you do not automatically have the right to the money; instead, you have only those rights given to you in the plan documents, which you should review.

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