Why are former employer's matching 401K contributions still showing up in my account

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Hi, all.

I started working with a large corporation in late 2014. I began a 401K as soon as possible with maximum employer contributions. I left this employer in summer of 2015. Unfortunately, I had to take a distribution of all my vested funds at that time. I am puzzled, however, to see the non-vested funds still on my statements (it's now August, 2016). The 401K administrators (Fidelity) are aware that I am no longer an employee of the company. The company has a two-year timeframe before an employee is vested. It is now almost two years. What will happen to those funds? Is this a snafu? If, after the two years are up, I request to rollover or take a distribution from those funds, what is likely to happen?

Unfortunately, the employer is very bad about distributing plan literature, and if I ever had a booklet, it is long gone, and I have no way of getting another.

Thanks!

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I had this happen to me... About 4 days before they vested, the funds were pulled from my account in a "forfeited" status. I worked for a very large global company that does these checks at vesting time, so YMMV, but I wouldn't count on them being distributed to you.

I was enrolled in a company 401k that I was not eligible for. Fidelity has the account. It took the employer a few months to get a clue that I was not eligible. Meanwhile the paycheck withdrawals / transfer to my 401k account continued.  Fidelity referred me to the employer HR. The employer SNAFU canceling my status and getting my share deposits back to me. The account is still in my Fidelity profile, but with no balance. I have not worked for that employer for a couple of years.

jamsanomatic said:   I had this happen to me... About 4 days before they vested, the funds were pulled from my account in a "forfeited" status. I worked for a very large global company that does these checks at vesting time, so YMMV, but I wouldn't count on them being distributed to you.
 This is the most likely scenario.  The company doesn't want to constantly maintain the accounts for departed employees.  They probably just do it once per year to keep administrative costs to a minimum.  

minieditor said:   Hi, all.

I started working with a large corporation in late 2014. I began a 401K as soon as possible with maximum employer contributions. I left this employer in summer of 2015. Unfortunately, I had to take a distribution of all my vested funds at that time. I am puzzled, however, to see the non-vested funds still on my statements (it's now August, 2016). The 401K administrators (Fidelity) are aware that I am no longer an employee of the company. The company has a two-year timeframe before an employee is vested. It is now almost two years. What will happen to those funds? Is this a snafu? If, after the two years are up, I request to rollover or take a distribution from those funds, what is likely to happen?

Unfortunately, the employer is very bad about distributing plan literature, and if I ever had a booklet, it is long gone, and I have no way of getting another.

Thanks!
 

  I am assuming the funds show up in your account but as unvested, correct?

You will most definitely not be able to distribute it (unless their system is really botched up) after the two year vesting period is up. The reason they are still on the account maybe due to what the plan provisions say about forfeiting the match. For example, if you were to rejoin the company, does the two-year vesting clock restart or can you use your previous employment to count towards those two years --- I dont know but it is what the plan documents say.

Till such time that those time periods where you could reclaim the unvested match lapse, the funds will presumably show on your account but as usual you may not be able to distribute it.

BigTR said:   
jamsanomatic said:   I had this happen to me... About 4 days before they vested, the funds were pulled from my account in a "forfeited" status. I worked for a very large global company that does these checks at vesting time, so YMMV, but I wouldn't count on them being distributed to you.
 This is the most likely scenario.  The company doesn't want to constantly maintain the accounts for departed employees.  They probably just do it once per year to keep administrative costs to a minimum.  

  
Yes, the same thing just happened to my wife (401(k) is with Transamerica)).  Will roll over to Vanguard.

One reason they might do this is for rehire rights. It is complex, but there are special rules when you are rehired before a certain elapsed time. There are circumstances where you are entitled to pick up vesting from when you left.

Let's take a step back and simplify things: You left the company and are now still getting "paid" (although in an account for which you may or may not ultimately be able to access the funds).

The money is not yours. It's a mistake, glitch, or an accounting loophole which will be closed in the near future.

If it's indeed a mistake, the right thing to do is to inform your old company. The wrong thing to do would be to keep money that isn't yours.

I was reading over my plan docs as I will be pushed out due to a merger. In reading it, I learned that as long as I work 1,000 hours (roughly half the year) I will remain entitled to a profit sharing distribution that typically happens at my company the following year in May. I am also entitled to a true-up of the match, as I frontloaded my contributions (hoping to double up the $18k for 2016) which meant that not all of my annual salary received the 3.5% of comp match (just the portion until I maxed it).

I am not sure if I will need to leave my plan open in 2017 in order to receive these two payments or how it will work, perhaps they will send me a check. I am fully vested in the employer contributions so I plan to ask in my exit interview. I expect they won't know the answer but it will put them on notice.

You have a right to the plan docs.  Contact the administrator and they will typically mail them to you.

Sesq said:   I was reading over my plan docs as I will be pushed out due to a merger. In reading it, I learned that as long as I work 1,000 hours (roughly half the year) I will remain entitled to a profit sharing distribution that typically happens at my company the following year in May. I am also entitled to a true-up of the match, as I frontloaded my contributions (hoping to double up the $18k for 2016) which meant that not all of my annual salary received the 3.5% of comp match (just the portion until I maxed it).

I am not sure if I will need to leave my plan open in 2017 in order to receive these two payments or how it will work, perhaps they will send me a check. I am fully vested in the employer contributions so I plan to ask in my exit interview. I expect they won't know the answer but it will put them on notice.

You have a right to the plan docs.  Contact the administrator and they will typically mail them to you.

  Most plan documentation will say any un-vested funds will be subject to forfeiture upon willful (or unwillfull termination). My plan specifically had exceptions around retirement and disability related issues, but all other terminations were a no go for keeping the funds. Mergers are an interesting topic and I've found (in my company), that the employee will be able to keep their funds, since it wasn't their "fault" they're no longer employed by Company A.

But of course, all YMMV. OP, you should be able to get the documentation from Fidelity as well. I was able to get my plan literature directly through them without having to go through my employer.

I left my $$ in an old employer's 401k.  They eventually took the unvested portion of the match.  But interestingly enough, they still match the dividend that I'm invested in, so there's little to no incentive to roll it over.



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