What legal action can I take against my former employer for refusing to roll over my pension plan to my IRA account?

Transfers are easier to complete than rollovers. Your pension administrator handles all of the transferring of funds. You move money from your pension to an IRA by signing a transfer request form with your pension administrator. The administrator then transfers the funds to another financial institution of your choosing and the new institution sets up the IRA once you have successfully filled out an application for an account. There is no 60-day window for the funds transfer and no risk of being penalized. Finally, nothing is withheld. You receive all funds in your new account immediately and do not have to file for a refund.

Related Reading: Is a Defined Benefit Pension Plan a Separate Legal Entity Under the Law?

Transferring your pension to an individual account gives you more control over the investments in the account. You also gain the benefit of the option to convert some of your savings to a pension-like annuity payment at any time. Unlike pensions, the individual account doesn't force you into taking a payment from your IRA until you reach age 70 1/2.

One type of IRA gives you tax-free income without any requirement to take payments at age 70 1/2. The Roth IRA allows you to prepay your tax liability in exchange for tax-free future income. The Roth does require you to pay tax on all money you convert (the prepayment of tax). So, you'll have to pay income tax on all money you convert from your pension. However, this is a one-time payment of tax. This option may lower your future taxes, especially if tax rates are higher when you retire than they were when you were working.

Answer: I suggest that you meet with your employer to get the money transferred. If there is a continued refusal, then you need to consult with a labor law attorney. One in your community can be found on attorneypages.com.