Posted on 05/01/2014 12:25:33 PM PDT by TennesseeGirl
Questions about 401Ks.
“vesting” is the operative word. I’m no expert, but it’s not really yours until it’s vested.
You’ll want to find out all the gory details of the vesting schedule.
Some companies have a vesting schedule attached to their 401Ks. Though 10 years is the most common period for 100% vested. You should contact the financial institution that carries the plan and speak with a representative. They can give you details and unbiased guidance.
As I understand it, the employer contribution belongs to an employee when fully vested, in which vesting occurs after a period of some years. In places I have worked, the full vesting period was five years at each place.
The 401K funds are supposed to be kept with an outside financial trustee. My 401K is with Fidelity, which is a completely separate business entity from my employer. So, if my employer went out of business, the 401K money is still there with Fidelity. So it should not matter if your husband’s company is in financial trouble.
Hope this helps. I really don’t know much about these plans, but this has been my experience.
The vesting (guaranteeing of the employer contribution values) would be based on the employee’s longevity with the employer and/or based on how long the plan has been in force.
Do you have any statements from the retirement plan, or does he have online access? I believe she is wrong, and you most certainly should look into doing a rollover, as soon as all of his contributions are in the plan.
Don’t talk to the HR Troll. The 401K is probably administered by a separate financial institution. Call them. The contact info is probably on your 401K statement.
doesn’t make sense. if he’s been there for 14 years, then the company contributions should be vested (i.e., his property). he should ask to see evidence in the plan’s documents proving the HR rep’s point.
to your second point, the assets in the 401k should be protected if the company goes bankrupt. his account should be at a broker-dealer, and customer assets at broker-dealers are protected by SIPC.
Obtain a copy of the 401(k) paperwork and then have an attorney look at it. Do NOT take what the HR person who works for the company says as being factual. While it is possible the company structured the 401(k) to require a person to work for the company for 16 years before they obtain claim to the company’s contributions, it is highly unlikely the company did so.
What post #2 said. You may need two more years to vest. You still should be able to move or roll over the portion which the company did not contribute.
It sounds hokey, there is usually a vesting period, before vesting, the money is theirs, after vesting, the money is yours. Typical Vesting periods are 2-5 years, I was vested after 3.
You should get the policy from HR and review it rather than taking the word of somebody over the phone.
Don’t worry about it when Hitlery is crowned on ‘16 she will nationalize all 401k’s and put them in the (safe) social security lockbox. /sarc
http://www.dol.gov/ebsa/publications/wyskapr.html
Scroll down a bit at the link; there is a chart with vesting requirements, which would seem to indicate that the HR person is lying to you.
Thanks to all. He IS fully vestedl that’s why I don’t understand. But, this employer has changed the rules so many times over the years we don’t know what the heck is going on. Good advice. We’ll check with the company who administers the plan for the company. I’m just in shock right now. Almost 1/2 our retirement that we had planned on may be gone if she is correct about the way the employer has this set up.
As far as worrying about the funds and the possibility of the employer shutting it's doors, if all is on the up and up, the employer contribution has already been paid into the account of the plan administrator and is segregated. Do you know who the plan administrator is (ie. Fidelity, TransAmerica). If so, they most likely have a web site that you can log on to and will most likely get a much better idea of what you can do from the resources there.
The maximum legal vesting period appears to be six years:
3. When will my company’s contribution be vested?
That depends on the rules of your particular plan. Plan sponsors have some flexibility in deciding vesting schedules when the plan is set up. In some plans, participants are 100 percent vested as soon as they join the plan, while in others, participants have to complete a number of years of service before they’re fully vested.
By law, all participants must be fully vested after six years of service with the company. (If your employer has a cliff-vesting schedule, you must be vested after three years of service, the law states.) Additionally, a few guidelines typically apply to most plans. For instance, in most plans, a participant automatically becomes fully vested when he or she reaches the plan’s defined retirement age (commonly age 65), becomes disabled, or dies, or if the plan is terminated.
You should check with your company’s human resources or benefits representative regarding the rules of your specific plan.
The money he put in 14 years ago is probably fully vested.
However the money he put in last month probably isn’t vested until 2 or more years from now. Check with the 401k plan administrator.
Your 401K is subject to the regulation of the IRS, it has been since the regulation was established. You don’t own your retirement.
Do what you can for now (direct as you see appropriate). Unless and until fiscally conservative Constitutionalists are elected, be prepared to have your retirement savings converted to 3% per annum growth in gummint “investments”, (bonds).
Don’t ask me how I know.
Typically, it's a percentage (for instance, 20% a year, for 5 years) or a cliff (you get nothing back except what you've put in, until you hit a pre-specified mark - usually 3 or 5 years). Or, you're just vested automatically - whatever it's worth, you get when you leave.
Vesting should be pretty well spelled out in the employee handbook.
Additionally, look to roll it over directly to an IRA rather than take a distribution to avoid taxes and penalties. Typically, you don't even want to touch a check.
Please note, I'm not an investment counselor, nor did I even sleep at a Holiday Inn last night.
Good Luck!
It is permissible to require a vesting period in order to be eligible to claim the employer’s match. But I’ve never heard of a vesting period that extends past an employee’s employment.
This seems like a scam to me. Lawyer up.
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