The corparation that I worked for has filed chapter 11 and I am wondering what effects it will have on my pension and 401k.thank you AL
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
The corparation that I worked for has filed chapter 11 and I am wondering what effects it will have on my pension and 401k.thank you AL
Asked on May 29, 2009 under Bankruptcy Law, Massachusetts
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 15 years ago | Contributor
Bankruptcy filings freeze all the assets of a company while the business and its creditors sort out restitution. What happens to a 401k plan depends on the type of bankruptcy protection an employer seeks -- Chapter 11 or Chapter 7.
Chapter 11 bankruptcy is a debt reorganization in which the business expects to continue operating. It is the most common type of bankruptcy filing by businesses. Workers whose employer files for Chapter 11 bankruptcy likely will see their plan continue operating. Current employees can still contribute to the plan, and former employees can request distributions in order to cash out or roll the money to an IRA or a new employer's plan that accepts rollovers. In Chapter 11, the employer may amend the plan document and reduce future employer contributions.
If your employer, or a former employer, is still holding your 401k saving and has declared bankruptcy, contact the plan administrator immediately. Don't wait for it to contact you; the sooner you act, the better off you are. Explain that you are a plan participant and provide your updated contact information. This way, you'll receive mailings related to the plan and when it comes to distributing savings, yours should arrive in timely fashion.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.