Withdrawing Your Money From a Mutual Fund

Do you have money put aside for an emergency? If you were unable to work for a period of time, do you have money to pay your mortgage and put food on the table? How many months of living expenses could you easily put your hands on?

If you are thinking that you could always raid your 401(k), think again. You would have to pay a 10% penalty on the money and pay tax on that money. But let’s say for the sake of this conversation that you’re okay with that.

So what’s the problem? The problem is the amount of time it takes to access your money. What most people do not know is that it’s very common for mutual fund companies to put up every roadblock imaginable to keep you from withdrawing your money. The problem is so widespread there is even an industry term for it — “conservation efforts.”

I have a friend who left his job to go into business for himself. He had his 401(k) money in three different mutual fund accounts. These are big names, the same names that you see in advertising on TV. My friend wanted to roll his 401(k) money over into an IRA. He contacted all three mutual fund companies and none of them would just release the money. Each company had their own special internal forms that he needed to sign before they could release the money. He asked them to just email him the forms, he would sign them and send them in. They informed him that they could not email the forms; they had to be sent by regular US mail.

There was no personal information on these forms — they were just blank forms that had to be filled in by this man. It makes one wonder why couldn’t they just email the forms? He waited two weeks and the forms did not come.

My friend called them again and asked them to send him the forms again. He then waited another two weeks and again the forms did not come. After about a month and a half two of the companies sent the forms.

These were not simple forms; they were complex, and that take time to fill out. The forms also needed to be notarized and also signed by his wife. This meant that both he and his wife had to take the forms to a notary public, and sign them there in front of the notary.

The companies also required forms from his past place of employment. Still, the company with the most well known name has not sent the forms. This process started back in the first week of May; it is now the third week of August. We have no idea how long it will take to get his money.

I asked my friend what would’ve happened if you needed this money for a financial emergency so that you could pay your mortgage. He quickly responded that he would’ve lost his house. Fortunately, that’s not the case, but it taught him a very valuable lesson that I’m sharing with you today.

This man will eventually get his money, and he will put it into insurance products where access to his money is quick and easy.

If you have questions or comments send an email to David@theAlemianfile.com, or visit my website www.CapitalCrestFinancialGroup.com.

Absolutely make sure you come back here next week for another edition of the Alemian file.