401Ks (Vanity)

Self ^ | 05/01/2014 | Tennesseegirl

[ken in texas]

How does that work if the fedgov says you are to be 100% vested at six years? Is it a moving target?

The target doesn't move, each employer contribution has its own vesting period which cannot exceed six years. In this case, the vesting period is two years, so any employer contributions within the last two years are subject to either partial or full forfeiture, depending on the terms of the plan.

[IYAS9YAS]

The target doesn't move, each employer contribution has its own vesting period which cannot exceed six years. In this case, the vesting period is two years, so any employer contributions within the last two years are subject to either partial or full forfeiture, depending on the terms of the plan.

Okay, then help me understand this. The guy has had a 401k plan there for 14 years. He should have been 100% vested at 6 years, so he's been 100% vested for 8 years. How is it the last two year's funds (his employment years 13 and 14) are not fully vested for him?

[ken in texas]

Each employer contribution has its own vesting schedule. Six years is merely the maximum period of time permitted by law for 100% vesting per contribution, it has nothing to do with how long the 401K has been active.

[IYAS9YAS]

Each employer contribution has its own vesting schedule. Six years is merely the maximum period of time permitted by law for 100% vesting per contribution, it has nothing to do with how long the 401K has been active.

That's not what the literature I've been reading on many sites, including the IRS, says. It says once you are 100% vested, everything contributed up to that point (yours and employer's), and forward from that point, is yours. It says nothing about each employer contribution having a vesting period. It says you, the employee, have a vesting period.

[IYAS9YAS]

http://www.research401k.com/401k-vesting.html

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Vesting

http://www.401kplanning.org/vesting/

http://moneyfor20s.about.com/od/employerretirementoptions/f/Vested401K.htm

http://retireplan.about.com/od/401kplans/a/vesting.htm

http://www.smart401k.com/Content/retail/resource-center/retirement-investing-basics/company-match - this one specifically states the vesting period doesn't restart with each employer contribution.

All of these specifically state you, as the employee, are vested at a certain time (the company has to at least meet one of two types of vesting schedules, it can vest the employee faster, but can't do it any slower than either of the two schedules - cliff or graduated).

None of mention anything about each employer contribution having a vesting period.

All the companies I worked for matched my contribution each paycheck, the matching didn't roll forward with its own vesting period, once I was 100% vested, it was mine.

When I was 100% vested, all of my 401k was able to be rolled over to an IRA, or even into my new employer's plan if I quit my old employer. None of it was held back. No waiting period. That's why I'm confused by the explanations given by you and Rum Tum Tugger. Everything says you, the employee, have a vesting period to be able to claim the employer matching as yours, not that each employer matching contribution has a vesting period.

[TennesseeGirl]

Last update. HR was WRONG. Thanks to all for advice.

[ken in texas]

Good references, thanks. Unfortunately, due to the 'crystal clarity' of all the laws and policies, there are still differences in interpretation. /s

At least in the case of this thread, post 46 indicates the issue has been addressed satisfactorily by HR.

[IYAS9YAS]

At least in the case of this thread, post 46 indicates the issue has been addressed satisfactorily by HR.

Good to hear! Yes, this really is confusing sometimes. I'm just glad it worked out for the OP. Good Friday to you!