Hopefully he doesn't do something silly with it like purchasing a product from Best Buy.

There, I fixed it for you.

That's typical of 401(k)s though. It's likely he could have bypassed Best Buy completely and contacted the 401(k) carrier directly. That way, it usually is just a phone call and maybe faxing a withdrawal form, depending on the company.

Any time you need to take a 401(k) withdrawal or rollover its usually a waste of time to go through your employer first.

Now I've heard that those 401k's have a tendency to overheat, you really should consider an extended service plan, and also to get the best performance out of it, I'd recommend Monster cables...

@rte148: @Prole: Actually, they'd screw it up too. At least they did for me.

When I left Best Buy several years ago I contacted the plan carrier and gave them the information for my IRA account. Rolling 401(k) money into an IRA is tax-free when you do it directly (meaning I never touch the money). I gave them the address, the account number, and the instructions. What did they do? They mailed me a check with taxes taken out. It took 2 years for me to "recover" (through tax deduction) the several hundred dollars tied up by their mistake.

If he kept trying passwords after they did the first password reset, I don't think you can blame best buy for it. The question is was it locked before the first password reset and for some reason the system didn't clear the lock when the reset was issued, or did the user attempt to keep trying passwords after the first reset?

@thnkwhatyouthnk: I see what you did there.

Yeah I would have just dealt with the 401k carrier. So far any time I've needed to talk to Fidelity it's been good and never had an issue.

@Prole:

I'm with you on this. Best Buy doesn't run the program. Some other financial institution is responsible for maintaining it. He should have contacted them. I really don't feel too sorry for this guy. Clearly he has no idea how the program works.

As I just mentioned in a reply, I don't feel too sorry for this guy. Best Buy isn't responsible for maintaining his 401k account. Instead, some other financial institution runs the program. He should have contacted that financial institution instead of Best Buy. Clearly he doesn't know how a 401k program works.

@Pupator: I've heard of that happening. That's an error on the part of the plan carrier. The thing to do is to not cash the check and contact the plan carrier to request a stop-pay. Inform them of the mistake and then go from there. It's painful, I know, but it's still better than trying to recover the taxes over the course of however many years.

Is that kinda agianst federal law for witholding funds like that, even in this case? I mean this was a horrible comedy of errors, but jeez, don't you think that BB could get in trouble over that?

@FDCPAGuy: Fidelity is a good company. I love that you only need to make a phone call (for most plans) in order to have a direct rollover completed. Many companies have 4-5 page forms you have to complete before they'll roll the money, or *shudder* they require a plan administrator signature. Ick.

@Gramin: I'm scared to think about how much he lost due to taxes and fees with a direct withdrawal like that. If it was a 401(k) annuity it could go as high as 20% of the investment, or more! Steep.

I am a computer geek on a grand scale, but I still think it's ludicrous that you have to have an online account to access your money.

I used to work for a 3rd party benefits administrator, and had to deal with this sort of situation all the time. There's two issues that I want to address:

1) The OP referred to the 401k funds as 'MY money'. Technically, this is true. But it would be MUCH more accurate to say, "My money, which I agreed I would have limited access to, agreed to jump through hoops to retrieve, will take a BIG tax hit to withdraw early; all for the benefit of a tax break if I leave it alone til retirement." A 401k is NOT a checking account, or even a savings account like you get at a bank. It is a RETIREMENT account. Trying to get it before retirement is, at best, difficult, and at worst, can result in unplanned financial disaster.

2) Regarding password resets. BBY ought to have an alternate identification system for when passwords are screwed up. This is either a policy failing of BBY, or some seriously idiotic CSRs working the phones. I think the former is more likely, since the supervisor couldn't get things squared away on the phone. While it is certainly an inconvenience for the OP, I think that given Point 1, he should realize it's not as easy as making a withdrawal from the bank. And don't be surprised if the Direct Deposit takes a couple weeks to get to your bank account, even after you access your 401k at BBY and request the withdrawal...

@Corporate_guy: It could be something as simple as the IVR system not recognizing the temporary password when typed in when the guy calls. So you end up waiting 2 weeks for the password reset, only to have it not work (properly) when you call in.

This is (one of many reasons) why IVR as a self-service option is so flawed.

Remember to put aside the tax dollars for the penalty you WILL pay to the IRS in April 2010. The best thing to do is roll over to an IRA. If you use ScottTrade, there are no fees for an IRA.

@Gramin: Look, I don't think it's a sin that the guy isn't as knowledgeable about this sort of thing as you are. It hardly calls for this snotty, elitist attitude.

I would think that it would be more proper to share your knowledge with him, so that if this sort of thing should ever occur again, he'd be better armed to deal with it.

@Gramin: See the difference between yours and Prole's approaches? He's giving helpful advice, whereas you appear to be taking some sort of pleasure from the OP's ignorance about how these things work.

Unless you were born with all the knowledge you'd ever need for the rest of your life, it's sort of a douche-bag thing to look down on someone for not having the experiences you have, which is what his ignorance likely amounts to. You had to have picked this information up somewhere at some point in your life, and so will he. No need to be a jerk about it. ;)

@Cyberxion101:

It's called reading the information provided to you. Sort of like "ignorance of the law is no excuse." The terms of his 401k, along with the fund manager, are spelled out to him when he signed up for it. In fact, he probably chose how much money to invest among several funds. My attitude isn't elitist. Rather, I suggest people read a bit before signing their name and sending x percentage of their paycheck to the program.

This sort of relates to the housing crisis. Why would anyone ever get an adjustable mortgage unless they plan on selling their home within 5 years!? People just sign away their money without any thought... or without reading the terms!

@Deborah Gray:

You don't have to. It's much easier, but not required.

@Nighthawke:

Nope. What people are failing to realize is that Best Buy is not the fund manager. In fact, Best Buy has no clue how much money he has in his 401k. The OP should have contacted the fund manager to begin the process of cashing out or rolling over the 401k.

Please, please... read the information before making financial decisions.

@TheRedSeven: I agree with point one. However I think that you have to consider that sometimes a plan participant just needs the money now. If they're willing to sign off on the penalties then that's on them. Sometimes, there are compelling reasons to take the money despite the drawbacks. Dare I say, sometimes it's a disaster to not take the money. Sounds like, in this case, the guy needed it pretty bad. Retirement accounts are great, but no one needs to live in a refrigerator box until then.

Point two though, well, the people administering the Best Buy 401(k) should just direct customers to the carrier customer service instead of trying to serve as a middle man. Employer staffed 401(k) customer service rarely does a better job and usually can't help with more complex transactions.

Regarding the processing of the payment, taking a month or more is just awful. These things should take a week or two at the most. This isn't a pension plan we're talking about here.

@Prole:

Yep! Again, I'm not feeling bad for this guy. A 401k is intended for retirement, not for extra money on a rainy day.

It drives me crazy that people are so ignorant with their money. If you don't know what a 401k is, you probably shouldn't enroll in it.

Does anyone know how Best Buy's 401k works? For example, my company matches dollar for dollar up to 5% of my yearly gross income and there is no vestation period. Anyone know those types of details for the BB 401k?

He's young and he needed the $900 now- seems reasonable him wanting the money. And seems like BB didn't have the answers about WHO he should contact (i.e. third party) to get the money.

I cashed out once for a similarly small amount a long time ago- I filled out a form and got a check in 2 weeks.

@Gramin: Hardly fair. No one expects the participant to know the ins and outs and every detail of their plan. That's why we have customer service (at my company, scratch that, most companies!) to explain the consequences and make sure they are knowledgable about what's going on with whatever action they take.

These are retirement plans, not house purchases. The similarity between the two is that they both involve money... that's probably it.

@Gramin: Did you completely miss the point of the article? If you didn't, then youre just being an asshat.

@Prole: Thanks for giving helpful advice without being a jerk. Some people don't seem to know how to do that here...

@Cyberxion101:

Yes, I did acquire this knowledge later in life. I came upon it when enrolling in my program and after READING THE PROVIDED INFORMATION! Unlike the OP, I don't sign my name without reading the TOS.

My biggest issue here is that everyone is attacking Best Buy. The truth is that Best Buy has no control over the 401k. Sometimes, the company gets it right and the consumer/employee gets it wrong. This is one of those times.

The only silly thing he could do with that money, if he ever gets it, would be if he went out and spent the money on consumer electronics at Best Buy.

@Gramin: Actually, the OP's mistake was to go through Best Buy rather than the carrier for the withdrawal. I didn't see anything about him complaining about the fees and taxes (although I would have, ha!).

It depends on the documentation that Best Buy used when enrolling the participant. Sometimes the carrier's presence is small, like a brand and a phone number... on the back... in small print. Knowing to contact the carrier is the result of either being in the business or having dealt with it before. Sounds like the OP is new to it, in my opinion.

No vesting? That's awesome! A bit on the low end for the match though. Is it a 401(k) annuity? Sometimes CDSC can take you by surprise with a rollover. Some plans with no vesting deliberately use a 401(k) with surrender charges. Those schedules can go 7-8 years sometimes. I'm sure you know all about it ;)

@TheRedSeven: i've had problems because some websites COUGH VERIZON COUGH don't like firefox. and it took like 15 emails for them to go, oh you might want to use IE instead of firefox

@FDCPAGuy:

Also shouldn't this story be retitled as 401k Company ties up a grand of guy's money for a month? BestBuy was simply acting as a middle man and has no direct control over release of these funds. This and the HSBC story last week appear to be using the BBY name to get page views *shocker*

@FDCPAGuy: I would like to know who the carrier is, but it's not the point. It's that Best Buy set themselves up as the middleman and created additional, unnecessary, requirements. We don't know what the carrier required.

@chiieddy: He said that the direct deposit would be "taxed." I once had a contribution from an old employer cashed out without my prior authorisation - and they withheld the appropriate taxes.

I immediately took the disbursement check, ran to the bank and opened up an IRA, and deposited the check + withholding amount.

I hate the feeling that the IRS got to hold the withheld amount, even if the amount was returned on the following tax return.

@Prole: Plus, I've been in a similar case as he is. You don't have enough in your 401(k) for the plan to transfer it, so you have to take it out within a certain amount of time or roll it into an IRA. When I had that experience, I lost my job and didn't have anywhere to move the money too. I took the penalty as I only had a few hundred in the account. I knew I would have to pay taxes on it later so when I got a new job, I withheld more to cover it.

Hopefully he doesn't do something silly with it like go investing in the stock market.

Not sure if I appreciate this snark. If the 401(k) was previously invested in stocks, chances are he just realised significant losses on his contributions.

Putting the money back in the market might be something of a gamble in the short term, but I'd hate to think the 1-2% yields on Money Market Accounts will keep pace with inflation.

You have to admit - there's not as much fear and panic on the Street as there has been for a while.

@Coelacanth: If you had the change to authorize it and went through the carrier you could have requested that they NOT take any taxes out.

What you did is called a 60 day rollover. There are no tax penalties for that, but you have to report it when you do your taxes.

Best Buy's 401k's USED to be done through Fidelity (at least they were when I worked there). I had most of the same run around, getting my stock options out was even more of a hassle.

I contacted Fidelity directly and got them out in no time.

Best Buy wanted to tie up my money, too (though perhaps not for as long as Patrick's case).

I was looking to buy a particular computer. Been waiting for MONTHS for them to get it in stock at my store so I can buy it with cash. Their web site showed the store getting it in stock a couple times. I go there the next day and it's been sold (or stolen, maybe ... they don't seem to have any access to sales records). Or maybe it just never arrived and the web site is a big lie.

Just last week they "discontinued" the model. It doesn't even show up on the web site anymore. One of the employees at the store near me checked to see what other stores still have it and there is one store that has a few (why are they getting them all?). It's too far to drive to.

They said they could have it transferred. But I would have to pay for it in advance and it could take two weeks or more and they were not sure how long.

They could have sold more computers if their stock management was functioning properly, and if they would just distribute them to where the demand locations are. So when is Best Buy going to meet the fate of Circuit City?

There's a really good way to handle these situations. Contact the Dept of Labor. One company I worked at tried saying I never had a 401k with them and within days I had a VP calling me to apologize.

@Prole: Right... in my case, I didn't even know I had a retirement account from that employer until the check came in the mail.

@Coelacanth: erm, yes, I meant to say _if you had the chance to authorize_. That was poorly worded. Sorry.

@TheRedSeven: At what point in the article is there any mention of an IVR system?

@Gramin: A 401k is intended for retirement, not for extra money on a rainy day.

Yeah, that 900 bucks is really going to make a huge difference. He may have to delay his retirement by a whole 2 weeks!

@Gramin:
It's not as clear as you are trying to make it out.
when I changed jobs and wanted to access my 401k, I had no choice but to go through my previouse employer as that was the procedure the investment firm had in place. They would not help in any way execpt to give me the contact info for the plan administrator at my previouse employer. According to the several people I spoke with, including several managers, ONLY the plan admin could make any changes to my account.

@Prole:

Low end for the match? Maybe I wasn't clear. They match 100% of my contributions, up to 5% of my total yearly gross income. For example, if I make $100,000 and contribute $5,000 per year, they'll also contribute $5,000. If I choose to contribute, $10,000, they'll only contribute $5,000 as that is 5% of my gross income.

Carrier's presence is small? I don't agree. When enrolled in a 401k, you have the option of diversifying your investment. I can move around my money and invest it among several funds. This is a typical part of a 401k. That said, the carrier's presence is large and he should be receiving quarterly reports on his investments and their performance. Again, this seems like pure ignorance. A 401k is not something like a pension which is easy to overlook. 401k's invite and require active participation by the employee. It appears he was blindly participating and that's just dumb and dangerous.

@yesteraeon:

My point was that the penalties are stiff for withdrawing early and without just cause.

@Gramin: Well, maybe I should say your match is middle of the road. Is that fair? Don't try to impress me with your fancy examples! Ha ha!

When *you* enrolled the carrier's presence was fairly obvious eh? That's great! However, that might not be representative of all companies. These plans are sometimes negotiated out with the employer, especially with large companies. Some large companies like to maintain a fair degree of control and will minimize the presence of the carrier if possible.

Hard to guess how Best Buy is since I don't know Best Buy's plan specifics. Likely they've taken the contract package and rebranded it under themselves (which some carriers are fine with) and taken a greater role in the servicing of it. Yes, that's all guessing but it fits with the article. If you can make assumptions about the OP then I can make assumptions about Best Buy, right?

You would be surprised how many people don't know who their 401(k) carrier is. ... Well some people would be surprised, but perhaps not you Gramin. You seem to have a low opinion of the people who don't educate themselves on these things. I guess I'm a little more forgiving of that. I know it took me a while to learn what I have and it's because I work in this business. There is a lot to know.

I congratulate you that you've learned so much. Perhaps, though, you should consider moderating your approach in these posts. I will bring this full circle and point to the post. The customer didn't complain about the fees and taxes. It seems that he needed the money. A 401(k) is not a savings account, it's true. But it's not a sacred cow to make sacrifices for either. I've always thought, if you need the money, then take it.