I have a question, does anyone know if a company can keep you from cashing out a 401k? I was let go in January and my 401K is less than $300 but the economy around here sucks and unless I want to flip burgers for minimum wage there aren't many jobs. I wanted to cash in my 401K just to help me out with bills until I could find something decent. But i was just informed that I can't touch my 401K until the year end. Is is legal for them to hold that from me? Please let me know.

Thanks!

If that's what the plan document says, then yes, it is lawful.

Do you realize that out of that $300 you will have to pay taxes and a penalty?

I thought that if the balance was under $5,000, the law required it automatically be cashed out. Why did I think that?

It sounds like the plan rules provide for annual distribution only. Ask your ex-employer for a copy of the Summary Plan Document, if you don't already have one.

Patty, if the balance is under either $5000 or $1500, depending on which set of rules the plan document was written under, the law gives the administrator permission to automatically cash it out but does not mandate them to.

Thanks, cbg, I was pretty sure I wasn't completely off. ;)