Workers wonder why they haven't received their retirement money after their plant closed in January.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Ellery Smallwood lost his job, and now he's worried that he'll lose his $50,000 investment in a 401K retirement plan.
The 44-year-old Youngstown man hasn't been able to get to his money, even though he was laid off from Metal Services International in Niles more than a year ago and the plant closed in January. He wonders if the money will disappear as his employer did.
"I'm worried about getting it," he said.
The steel processing plant, which employed about 50, had been locally owned until it was bought by Metal Services International of King of Prussia, Pa., in 1997. The plant previously was known as Exactacut Steel.
Others fearful: Many of the 42 employees who were in the 401K plan are worried about their money, said John Halchuck, senior document writer for AMI Benefit Plan Administrators in Howland.
They've been calling him because his company administers the Metal Services' plan, which has more than $1 million.
"Their money is all there. Period. Every nickel of it," Halchuck said.
Concern has developed, however, because of delays in the Internal Revenue Service's processing of documents needed to officially close the plan and disburse the money, he said.
Although nearly all of Metal Services' workers lost their jobs by October 2000, the plant still had a small number of employees until January. The company then followed proper procedures to close the retirement plan, and notification was sent to the IRS in April, Halchuck said.
He said the IRS has 60 days to process a plan closing, but the agency is able to grant itself extensions, which has been done in Metal Services' case.
An unusually high volume of work has caused the delay, he said. New federal rules require that all plans be changed in certain ways either this year or next year, so the IRS staff has extra work to review all of them.
Because of this workload, the Metal Services' plan has been sent to an IRS office that normally does a different type of work, which is leading to some of the delay, he said.
Time frame: Halchuck said he isn't sure how long it will take for the IRS to approve closing the plan but it could be from one month to six months. Distributing money to employees will take an additional one month to five months because all participants must be contacted, he said.
As he waits, Smallwood is concerned that his money will disappear in some kind of white-collar crime.
Halchuck said, however, that the IRS rules that are causing the delay are in place to make sure employees receive all of their money. The IRS checks to make sure the money is there and that the plan has been updated to comply with all changes to federal law.
Smallwood, who said he is living off his savings, had hoped to use the money to open a restaurant, but now he thinks the economy in Youngstown is too bad. He is taking classes to become a machinist and plans to leave the area when he is done.
Halchuck said the delay in receiving the money is creating hardships for a few people who need the money for immediate expenses, but most of them aren't being hurt, because they will convert the money into a different type of retirement account.