Cashing out a 401k Nebraska

[Barbe]

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!

[cbg]

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?

[Pattymd]

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

[Pattymd]

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.

[cbg]

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.

[Pattymd]

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