Q: A client of mine was recently laid off from his job. He wants to roll over his 401(k) into an IRA account with me but his employer has apparently refused to allow it. Can the former employer simply refuse to roll over his 401(k)? —F.B., Florida

 A: Every 401(k) plan I have seen allows employees who leave to continue in the plan. It's possible the plan document might require withdrawal of the funds upon a termination of employment rather than a rollover. If that's the case, the plan document itself should set forth how the money would be returned out of the plan and how withholding will be calculated. If the company is simply refusing to comply with what the plan document calls for, that would have implications under the Employee Retirement Income Security Act (ERISA). For example, simply refusing to give a copy of the plan triggers a fine of $100 a day. ERISA involves a very specialized area of the law, however, and I'd suggest that your client contact an attorney with experience in that field.

Q: My firm was recently acquired. I am contemplating leaving since I don't like the firm that bought us. I have an employment contract with my old firm that has a non-compete/non-solicitation clause. Can the firm that bought us enforce that clause against me if I leave? I also received an upfront bonus from my old firm when I was hired. The bonus is structured in the form of a forgivable loan with a promissory note, which still has three years remaining. Can the new firm come after me for the balance of the note? —M.R., California

A: As it relates to your employment contract, the place to start is the contract between the firms. There may be provisions regarding assignment of rights. In the case of an asset sale, it's possible that the seller assigned its rights to enforce employment contracts. Another factor to consider is whether your original employment contract has a provision allowing your old firm to assign its rights in your contract to another entity. If the contracts (your original employment agreement and the purchase and sale agreement between the two firms) are silent as to assignment of rights, then it will depend on the law of the applicable state as to whether an acquiring company has the right to enforce the employment contract. While the law varies from state to state, generally speaking where personal services are involved (i.e., employment contracts) there seems to be a greater tendency to say that the identity of the employer is an implicit assumption of the parties in entering into the contract. In other words, since the new firm is not the same as the old firm, you did not "bargain" with this company regarding your employment contract.

On the second question, I believe your forgivable promissory note would be considered an asset of the acquired firm, and since it is buying the assets of your former employer, it should be able to enforce the promissory note. Likewise, if the firms simply merged, the notes, as assets, would be acquired by the merged/surviving entity and would be enforceable as well. But after the acquisition or merger, your new employer may ask you to sign a new employment agreement or promissory note. Then you would be bound by that new agreement regardless of whether the original agreement would have been enforceable.
(My thanks to attorney David Thomas, of Pryor Cashman in New York, for his input on this question.)