Five years, two articles in this space, assistance from the Labor Department and the Internal Revenue Service and prodding from one no-nonsense bankruptcy judge — that’s what it took for owners of the 401(k) plan sponsored by Penn Specialty Chemicals to gain access to their money last month.
Finally, these 401(k) holders have been released from the limbo where they’d been trapped since their company filed for bankruptcy in December 2008.
While such fiascos don’t occur everyday, the Penn Specialty Chemicals 401(k) case shows what can happen to account holders if their company collapses. It’s not a pretty picture.
When a company goes bankrupt, the assets of its 401(k) are supposed to be transferred to account holders promptly. But that didn’t happen here.