Posted on 08/13/2010 2:39:11 PM PDT by beaversmom
My husband had a 401K with a previous employer. We let it sit with the old company's administrator. It wasn't losing or making any money. Checking on the 401K administrator's website the other day, I see, to my surprise, the balance is zero in his account. It had been moved to a new company as the previous employer had been bought. Calling the new administrator for one question, we find out from them that my husband is no longer vested in the company match as he had once been. Speaking today with www.dol.gov/ebsa in Kansas it seems that the new company doesn't have to honour the old plan rules on vesting. We have to wait to call the Human Resources person at the new company on Monday to find out for sure. Anyone else have any experience with this?
Why have you ignored this 401k Money in the first place? that is the most important question.
You are correct, we should have done something sooner. I'm not sweating it too much as the company match wasn't a huge amount, but I didn't know that you could be vested and then unvested if that is in fact true. Have to find out more Monday. Just a heads up too for other people that may have an old account.
Sorry Lou—I don’t think I was too clear in my initial post, but I really did try to be. See subsequent posts for (hopefully) clarification if you are so inclined.
Sounds to me like an error when the transfer was made. Somebody might have keyed in the wrong start/termination date at the new plan so they aren’t calculating his vesting correctly. Mistakes happen.
BUT, then again, the more I think about it..it is possible they could change the vesting.
That would be nice. I was thinking, maybe hoping, that the information just wasn't given to AUL yet. The guy at AUL told my husband today that a new plan can change the vesting terms though. I don't know. The lady from the government office seemed to indicate the same thing. We'll have to just to hear what the H.R. person says on Monday and get the plan terms in writing like the other FReeper suggested. She was, of course, on vacation Thursday and today.
There should be no matching funds after he leaft, but if the company’s rules were that he was fully vested, then the money was his. They can’t take back what now belongs to him. Check with the previous administrator to see how much money he had and what the vesting was. I don’t know how long he worked for the company, but I have never seen it take more than 5 years to be fully vested. It’s usually a sliding scale: end of 1st year, vested 20%, end of second year, vested 40%, end of 3rd year, vested 60%, 4th-80%, and 5th-100%. Also, at ALL times, from the very first, all of your husband’s contributions were his. The only question is whether he was vested in the employer’s match.
He worked there 7 years and had the 401K for just over 5 years before he left. The money was initially with Principal. We have those statements that say he was 100% vested after the 5th year. Then the account was transferred to Great West. None of their statements indicate the vesting. Now it’s with AUL.
I’m glad it wasn’t a large sum. If he was vested, then the money is his, not theirs for the taking.
They cannot take what has already been given to an employee if the employee is fully vested. The money is no longer the employer’s.
It can change for future contributions, but contributions already made are grandfathered.
Thanks Deb—I do hope that’s the case and AUL just doesn’t have the information from the new company yet. I still don’t know if you can be vested, then have a plan change, and be unvested. It doesn’t seem like that would be legal, but nothing surprises me any more.
Now that makes sense.
Twelve years ago my husband left a job he had only had for a few years just out of college. He had about $20,000 in a 401k and because the company seemed to have it invested in a good plan, he left it there. A few years back before everything went south in the market, he had about $30,000 there— it was his money, they couldn’t touch it, just of course they were no longer making contributions. At that point we rolled it over into a Roth IRA. As soon as it was put into your husband’s account, it should have been his money— did you get monthly or quarterly statements with the balance like we did? Was it invested in a plan that took a big loss? Oh for the days when my Dad was a foreman in a factory and had not only a pension but a 401k with 100 percent matching. He was being “phased into” the new 401k system from a purely pension system.
“No, no, no. Do not move it to your next employer’s plan. Roll it over into a private plan with someone like Fidelity or Vanguard. The it’s 100% yours and you have 100% control of it. Exact same tax advantages as a 401K plan with an employer, but you are in charge of your own money.”
True ... I didn’t specify where. You have ot be careful where you put it nexr.
He should have rolled it into an IRA as soon as he left the company.
It's your best option and from there be careful where you put it. There are too many “plans” out there. I wouldn't want the opinion of the state. What you do next will be specific to your plan, plan rules and situation.
There is no question that once you are vested...you are vested. It can’t be taken back.
My guess is that the person you were speaking with did not fully understand the question you were asking, and/or there may have been a record keeping error during the transition...it does happen from time to time.
My guess is the issue will be resolved without any major hassle.
If I am wrong, be sure to inform the new company and/or trustee that your next call is with the Department of Labor (DOL).
The plan can change the vesting rules going forward, but they can't go back and unvest what was vested. (Otherwise what good is a vesting schedule).
You were given incorrect information.
If your husband was vested, he is still vested, regardless of any changes in the plan rules, trustees, or investment carriers.
It’s the law.
After HR confirms this for you next week, get the paperwork to roll it to an IRA, or to your husband’s new plan.
You sure are.
She didn't say a word about matching funds.
And I believe that she did say he left the account balance with that old employer.
I happen to have the identical process going right now. I live in California.
First of all, 401(k) plans do not require matching funds by the employer. That is optional. Most of the contributions are employee pretax funds.
I left that firm 8 years ago, and left it there the entire time. The account grew about 100% in 8 years and I'm arranging to transfer it to consolidate retirement accounts this month.
Incidentally, the company reorganized; the name is somewhat different, but that had absolutely no effect on the administration of the account.
State and Federal regulations do not allow fiduciary game playing by 401(k) administrators.
Thanks g-pa and blaine—feeling better about this than I did Thursday and Friday. I think we are going to get it sorted out. I betcha the two AUL people were talking out their you know whats. The government person was just giving me general info—yes they can change their plans including vesting, but I don’t think she committed to it being okay retroactively.
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