Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

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carolynb2
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Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by carolynb2 » Thu Nov 08, 2018 10:10 am

I worked one year for an employer with a 2 year retirement match vesting period. 50% of the original deposits are mine, 50% comes from the employer match (eg 1/2 the value of the account is not vested and comes from the employer match, half of the value of the account comes from my contributions which are 100% vested).

I have noticed that that my retirement statement (retirement account is not managed by my ex-employer, rather it is managed by one of the major retirement fund companies so all information is on the retirement fund company website) still includes that non-vested money 7 months after I left the company.

My online retirement account page has a place to list termination date, however it is blank. That website sill lists me, accurately as not vested (since it has been only been 7 months since I left and vesting takes 24 months). If no termination date ever gets listed would I then, next May, be listed as vested because now 2 years have passed? Or do they have to check with my ex-employer about that (which I am sure would trigger the withdrawal of the non vested money)?

Is there a statue of limitation on how long my ex-employer has to take that unvested money back?

If they take back the unvested money do I get to keep any accumulations above and beyond the original match amount deposited by my ex-employer?

What happens if the market drops sufficiently that the total in my account is LESS than the combined total of my original contributions and the original contributions from my employer match? (50% is matched, 50% is not). In this case are they allowed to only withdraw the current value of "their" money if it is less than what they originally put in (eg so they take the loss too)? Or can they take back what was originally deposited by them even though this means I now have the "excess" loss taken out of my vested portion or I then have to write them a check for the difference?

Thank you.

123
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by 123 » Thu Nov 08, 2018 10:30 am

A lot of your questions will depend on the specific provisions of the employers plan. You can generally get a complete copy of the plan (not a summary) by contacting your employer. Make sure you request a complete copy of the plan. Some of them are hundreds, if not thousands, of pages depending on the complexity and age of the plan.

Plans usually accommodate a "break in service". If that's the case the plan may not post a termination date for you until the period for a potential return to service has elapsed. The plan likely keeps track of a lot of things that may not show on your online screen. They likely keep track of the actual work periods, or service periods, for tracking vesting. Frequently those are calculated based on so many hours of "work hours" during some period of time.

The employers usually keep track of everything in the account by keeping track of various subaccounts, including one for vesting matching contributions. I would expect that the unvested matching contributions are tracked entirely seperately from your own contribution. Since there are seperate subaccounts I would expect that losses in the unvested matching contribution would not impact other subaccounts, but I am not certain of that.

You can always contact the former employer for guidance.
The closest helping hand is at the end of your own arm.

carolynb2
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by carolynb2 » Thu Nov 08, 2018 11:08 am

123 thanks for your reply. I appreciate the information.

I think I was given a copy of the plan - maybe 6 or 8 pages - so that sounds like it might be a summary perhaps rather than the actual complete document? I will have to dig it out and look.

The HR department there is run by people who have no training in HR which complicates the situation. Also I don't want to trigger a termination date posting and thus a non-vested portion withdrawal if it is an oversight on their part by contacting them, especially if there is a statue of limitations for them to act. They have refused to honor the moving expense reimbursement portion of my contract and while I can take them to court, the cost of the attorney approaches the reimbursement. As a result I was hoping to "get it back" via their incompetence and failure to take back the non-vested portion.

Do you know if there is a statue of limitations to pull this money back or can they, say, take the money back 20 years from now?

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tfb
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by tfb » Thu Nov 08, 2018 12:30 pm

carolynb2 wrote:
Thu Nov 08, 2018 11:08 am
Do you know if there is a statue of limitations to pull this money back or can they, say, take the money back 20 years from now?
There is not statute of limitations. Unvested means unvested. When you ask for a distribution (withdrawal or rollover), they can take the money back if they see a terminated status. The employer match is tracked separately. When they take back a percentage of the match, it will include all earnings and losses.
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yohac
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by yohac » Thu Nov 08, 2018 1:11 pm

carolynb2 wrote:
Thu Nov 08, 2018 10:10 am
If no termination date ever gets listed would I then, next May, be listed as vested because now 2 years have passed?
The vesting would be based on your termination date (once entered) not how long the money has been sitting there. If you're not vested now, and you never go back, you never will be vested. That's of course assuming the parties involved in managing this plan aren't incompetent.
Last edited by yohac on Thu Nov 08, 2018 1:23 pm, edited 1 time in total.

oslocal
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by oslocal » Thu Nov 08, 2018 1:16 pm

I left my previous employer in July 2015 with 66% of their contributions vested.
In January they graciously added 15% of my 2015 compensation as profit sharing even though I no longer worked there. (also 66% vested)
In late 2016 (I think October), there was an adjustment called "forfeiture" for the unvested portion. I imagine it takes a while and that they do them in batches.
They also have a provision such that if I return to the same employer and put all my money back into the 401(k) they will re-establish the unvested portion.

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neurosphere
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by neurosphere » Thu Nov 08, 2018 2:17 pm

I participated in a plan in which unvested money could vest if I returned to the employer within a certain number of years. So there might be a good reason the money is still sitting there, and not at zero.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

zeeke42
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by zeeke42 » Fri Nov 09, 2018 3:13 pm

neurosphere wrote:
Thu Nov 08, 2018 2:17 pm
I participated in a plan in which unvested money could vest if I returned to the employer within a certain number of years. So there might be a good reason the money is still sitting there, and not at zero.
Here's something I've wondered about. If you're in this situation, and have a brokerage window option, could you do the following:
1. Rollover the vested amount to an IRA
2. make a long shot stock bet with the match dollars (something like a pharma startup in a clinical trial where the stock will skyrocket if it's successful and crater if not)
3. If your stock bet hits big, go back and work there until vested.

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neurosphere
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by neurosphere » Fri Nov 09, 2018 3:34 pm

zeeke42 wrote:
Fri Nov 09, 2018 3:13 pm
neurosphere wrote:
Thu Nov 08, 2018 2:17 pm
I participated in a plan in which unvested money could vest if I returned to the employer within a certain number of years. So there might be a good reason the money is still sitting there, and not at zero.
Here's something I've wondered about. If you're in this situation, and have a brokerage window option, could you do the following:
1. Rollover the vested amount to an IRA
2. make a long shot stock bet with the match dollars (something like a pharma startup in a clinical trial where the stock will skyrocket if it's successful and crater if not)
3. If your stock bet hits big, go back and work there until vested.
I've wondered if something like that were possible, but I don't know. The chances that any gains would be enough to justify changing jobs just to have that money from the 401k is so small as to not be worth the time to try.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

Hug401k
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by Hug401k » Fri Nov 09, 2018 3:40 pm

The money is tracked by type or source. One source is your money. The other is the employer match. You are entitled to whatever your employee contribution source of money is worth - up or down in value. If you are 0% vested, the employer match source will ever be yours whether the investment value goes up or down. In some plans, the sources of money can be invested very differently so total value doesn't end up being 50/50. (Years ago most employer matches went into company stock..then Enron happened)

Even if 2 years go by, you won't be vested and chances are they won't make a mistake. As soon as you request a withdrawal, the record keeper will verify your end date and remove the unvested money (it's forfeited back to the company so zeeke42's plan doesn't work) Typically,if you return to a company within 5 years, you get credit for previous years worked towards vesting, but that varies by company.

A well run HR office should have your end date updated at the recordkeeper within 2 weeks. Often that doesn't happen and the record keeper has to go asking about it when they get calls from former employees.

Spirit Rider
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Re: Statue of limitations on taking back unvested $ in 401K? What if value of match is now lower than original deposits?

Post by Spirit Rider » Fri Nov 09, 2018 4:31 pm

I don't think people understand what not vested means.

It is not your money until the vesting occurs. You can not rollover unvested contributions. It only vests by length of service. It will never vest if you are no longer employed. There is no SOL under which you will get the contributions.

As has been alluded to, the only reason that unvested contributions show in your account is for rehire rights. If you get rehired by a plan specific elapsed period, the vesting clock is resumed where it left off. If you complete the vesting, then and only then will the contributions vest.

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