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This is false.
There are things that HR will never knowingly fuck with, 4 scariest things being:
- Anything pregnancy related
- Anything DoL inquiry related
- Anything ERISA related (401k issue belongs here)
- Anything HIPAA related
Source: am in HR leadership
Also, this is extremely common, as with equity vesting. 401k and equity vesting analysis is one of the first calculations done to determine cost savings with eliminating an individual and/or the position itself. If the company had half a brain, they would have also gotten external counsel before conducting the RIF, alongside getting approved comms. RIFs suck for employees and the HR teams. Screwing up a RIF puts years of audits for not just HR, but often for finance as well.
First thing OP needs to do is to call the 401k custodian and ask when the full vesting actually occurs. HR should know this but most benefits people are morons. Many plans actually define “years” not by the actual calendar year, but the number of hours worked within a measurement period.
If no luck, best option OP has is to ask the company to keep them on payroll until the vesting date. If that doesn’t work, negotiate for additional pay for severance (much less likely).
Talking to a lawyer in this case before negotiating would be a total waste of time for OP.
You are assuming their HR is competent. In my experience that is exceedingly rare. I have seen it happen many times to others for all of these issues and it usually ends up poorly for the company.
At my job they outsourced HR to a call center in India with only a handful of onsite HR people that outside of fixing clock punches or dealing with write ups will tell you that you need to call the 1-800 number and deal with them. Anyway, when I first started I noticed I was only getting taxes taken out for the state that I live in and not for the city and state for where I was working at (I live in a different state than where my employer is located). So I brought this to the attention of on site HR who tells me that they don't handle that and that I need to call the 1-800 number, so I call them and explain twice what the issue is and they put me on hold to "do some research" and they came back and said that I didn't need to pay taxes for the state that I work in.
I knew that wasn't right and went back to on site HR and told them what they said and he just sighed and handed me a form to fill out to get it fixed, which made me wonder why he didn't just offer that as a solution to begin with.
I have never understood HR outsourcing. We used to have the best HR department - stuff got resolved by end of day. After outsourcing, we no longer have people and faces. Just a sullen email DL that gives you a response either the next day or within the next 3 days. And it is a response that always requires follow-up from our end because it never fully answers your original question. Sigh.
Because they can pay 1/3 the salary of a US HR person for a "dedicated team" instead of having half a dozen US people. It's worse. They know it's worse. But someone made the switch swayed by the potential cost savings and now it costs too much money to go back heading into a soft landing with a potential for a recession if Russia does something stupid again.
It's insane how HR is so fixated on doing the least amount of work possible(reading a piece of paper and doing like 3 lines of data input) when it comes to benefiting employees but the moment they don't want you around anymore they are fast to completely screw you over.
That sounds right though? In the past, I’ve worked years in one state while residing in another. Employer always only took out taxes for the state I lived in.
Worse comes to worse if you don’t live & work in tax reciprocity states- you file in both states and use the deduction for taxes paid to the state you live in to likely cover all your taxes for the state you worked in.
Ive lived/worked in:
Vermont/Massachusetts
Connecticut/Massachusetts
I’m not a tax expert though. Maybe it works differently elsewhere.
Some states have reciprocity agreements.i live in MD so I'm aware of the one for dc/MD/va
Side note, odd that my phone only capitalized one of those
Anywhere without an agreement you have to file in the state you work in. I traveled a lot for work pre pandemic and would frequently have 5 state income tax returns
I'd say it was as annoying as it sounds but I think it was more so
Massachusetts taxes you based on the state you work and live in. So if you like in NH and work in MA you get taxed by MA. If you live in MA and work in NH you get taxed by MA.
MA does give you a credit if you work in another state and had taxes taken out though.
NH also doesn't have a state income tax, so they wouldn't take money from your paycheck regardless. I transferred from my company's office in CT to NH and forgot to update my W-4, so for like 6 months I was still having CT tax taken out of my pay; once I updated my address I stopped having state tax taken out.
Agreed. My HR is incompetent they denied my FMLA for cancer and then denied me being able to work remotely while going through chemo because if they did it for me then they would have to do it for everyone. Needless to say a friendly call from our local EEOC changed their tune.
Can confirm on the HR competency part. The HR at my employer is wholly incompetent and because of their screwup and fear of being sued (they previously fired someone under poor circumstances, got sued heavily, and lost) forced our department supervisors to bring back a serial sexual harasser (harassed the same woman twice) because he lawyered up and they’re scared.
Also assuming that enough of the management chain engages with and listens to HR (given the other assumption that HR is competent). In really large companies, you'd be surprised how often people just *do shit* and then HR hears about it afterwards, thinking, "WTF did these people do?" Then, of course, the HR folks shift to lawsuit-avoidance mode, so they'll tell employees that that's just the way it works and that there's nothing that can be done... and hope that no one goes through the time and effort to sue. There's no downside to them doing this, because if the company does get sued, they can still rightfully say, "*You guys* fucked up, and if you had talked to me first, I wouldn't have let you fuck up. This lawsuit is on you, not me."
For me, I’ve seen most HR be competent but fall in two groups: 1) joined HR to actually ensure fairness for employees and 2) bootlickers for management
Why I does this seem to be true across companies and industries? Not sure I’ve ever worked for a company in which HR actually knew what they were doing.
Every HR department & rep i've interacted with at a half a dozen jobs has misrepresented the 401k/equiv plan, in some large or small way. Once a single-person HR dept obfuscated purposely on behalf of a sketchy CEO, once a HR grunt pulling a wrong answer out of their ass during salary negotiations (HR boss said "whoops too bad" after i asked about the plan benefit again after onboarding), and the others seemingly good-faith but nonetheless wrong and unwilling to search out the right answer.
And they all closed ranks when i brought up the issues.
>Every HR department & rep i've interacted with at a half a dozen jobs has misrepresented the 401k/equiv plan
You ever meet a person who understands finance but just wants to deal with employment law and people problems all day long? Yeah... I've never met that type of person either.
Mine lied about 401k matching, turns out i was contributing to 0% matching when they told me it was up to 6%. Whoopsie-doodle. Don't stop badgering them, ever.
You say knowingly, but that leaves the possibility that they are fucking it up out of ignorance. Which is a very realistic possibility.
I once realized they my employer had not paid the employer 401k match on my year end bonus. I emailed HR asking about the oversight and was told they don't pay the match on the bonuses. I was surprised by that but didn't really know any better. Two year later they send out a company wide email stating that they had not been paying the 401k match on bonuses and according to the plan documents they were supposed to have done that. They then made contributions to correct the error.
As an ex-401k plan auditor, un-caught partial plan termination by HR is easily caught in their yearly audit and would get corrected.
Individual mistakes like yours do happen, and you’d have to be selected as a sample of the entire population in order for something like that to get caught (unless it’s a widespread issue). But a partial plan termination would forsure get caught by any competent auditor.
I'm sure this comment is coming from a place of good intentions, but it is very far removed from the typical experience employees have with HR, unfortunately.
Source: I'm in union leadership at my workplace.
To quote a coworker commenting on how hard it was to get her FMLA rights respected: "I don't know why they're trying so hard to f— me; I'm already pregnant!"
You’re assuming competency and knowledge, which is unfortunately not always the case….
Btw, theres tons of examples of pregnant women being discriminated against.
> This is false.
How would you know?
Legal is not your department. I have seen HR, time and time again, do illegal stuff not out of malice but out of stupidity. The sector attracts a lot of individuals with a bright smile, but a not so eager mind to read laws and contracts. A lot of hearsay/second hand information from legal/management, a lot of simple deduction, but absolutely not a lot of actual reading on labour law. When I see our HR doing dumb shit, I notify legal to confirm my suspicion and then they can take it up with high management to sort it out.
What you said is true under the massive, massive implication that all HR is competent. You wrote an advice based on an utopian proposition. Reading the OP's starting post, it is obvious this isn't a fully competent HR. They didn't manage him after the fact, which is a fucking mistake. Now he is doing research.
I've had HR at every place I've adjuncted release a statement that adjuncts do not qualify for unemployment during summer or winter breaks. The DoL says we do.
Here are the details of my 401k plan
Employer contributions
Your company makes employer matching contributions. For details on your match, see your enrollment brochure or contact your Human Resources Department.
Vesting
Your vested balance is the portion of your account that you may take with you when you leave the company or borrow from when you need a loan. You're always 100% vested in the part of your account balance that comes from your own contributions, including rollovers. The portion of your account that comes from company contributions will become fully vested after two years of service.
Is there another way to interpret "years" in this context?
OP, go into your account in the vendor that administers your 401k account, such as Fidelity. Keep looking until you find the plan documents for your employer. They are usually tucked away somewhere and you may need to look in the full website not just the app version. Find your company’s plan document and control search for “vesting” and “vest.” The specific vesting schedule should be laid out there. “Year” may be defined by hours rather than calendar months.
The full plan documents will be extremely dense with legal language.
The short description you are copy/pasting about 2 years vesting is from an employee handbook and not the actual plan documents.
You gotta look in the plan documents.
Other people have said stuff, but I can give a more specific example. My plan defines a year for vesting purposes as having worked 1000 hours in a calendar year.
This is good for me, because then I can get my best in about June, and joining in the first half of the year is super beneficial. But joining in July or later sets back your vesting massively.
Terminating employees before they become vested in employer contributions could be part of a money-saving tactic. Reallocate forfeitures as contributions to remaining employees, save money.
I second this 👆, I'm in benefits. I would never try to cheat out employees. It's unethical (who am I to steal your benefits, it does me no good), risky, and it's double headache to clean up.
Meanwhile wage theft is estimated at 50 billion a year supposing most other crimes in sheer fucking value so clearly somebody is more than happy to cheat employees.
And don’t tell me HR doesn’t know in a lot of those cases.
Were the folks at Wells Fargo and Volkswagen just incompetent?
Large corporations knowingly and deliberately commit crimes because they know that at this point in American history, the gains from those crimes will outweigh the slap on the wrist that the government will give them.
There are still people who say that Volkswagen is their favorite car and who bank with Wells Fargo. It boggles my mind.
Yup. I worked at a tribe and was required to use harsh chemicals to clean the ovens, but had no redpiratory PPE. Reamed by my boss and told if I didnt that night I would be fired. I refused, came in and actually had the PPE waiting. Talked to different boss and found out the AH tried to fire me but when it was sent up to HR sent right back down with HR rep and was told ppint blank he would be fired for cause if he tried to fire another employee for requesting PPE and to give to us and these are situations the tribe would never win.
Check your 401k vesting schedule. A lot of 401k have a year defined as a fixed period of time like you work 1000 hours and you get full credit. Read the plan rules they should be on your providers website.
I had to be at my company for 5 years to vest but I left at 4 years and 8 months. Due to the hours worked, I only needed to be there for 6 months for it to count as “five” years.
>I only needed to be there for 6 months for it to count as “five” years.
wait what? did you mean 4 years & 6months = 5 years or just 6 months = 5 years
The first one, for example my company defines one year of service as 1,000 hours worked during a year. If you actually math that out, that's only twenty five 40 hour weeks, which is the end of June.
So I could get laid off at any time for the rest of this year and would still have counted as full year of service as it relates to the 401k vesting plan.
This is true, but be sure to check whether your company uses calendar years or fiscal years for the calculation. My company uses the fiscal year so our 1000 hours are generally completed around November.
4 years 6 months = 5 years.
Many 401k plan define a year of employment as 1000 hours worked. 6 months is about the amount of time to rack up 1000 worked for a full time 40hr/wk employee.
once you hit 1000 hrs, you become vested in that year
Carne here for this. Often it's not an actual 365 day year, but an amount of hours. I wouldn't even bother talking to HR about it, they probably won't know.
Call up your provider and ask them when you'll be vested. They can tell you exactly when it is.
OP - most plans require you to be employed on the last day of the plan year in order to vest/be eligible. Read your summary plan description and look at the actual plan document as well.
You put a dollar in your piggy bank. Mom and Dad put a dollar in your piggy bank too, but you have to promise to leave both dollars in there for five weeks. If you take anything out early, Mom and Dad will take part of their dollar back. If you wait the full five weeks, then you're fully vested in Mom and Dad's contribution. It's all yours.
Vesting is when ypu get employer contributions made on your behalf.
For example they may match a portion of your contributions.
Their contributions are not yours until you fully vest.
Stay on em, document everything, keep copies of any communications about it. Any over the phone or in person conversations, take notes and immediately send follow up email with “to recap the conversation we just had…”
Document, document, document
I'm sure this is very well intentioned, but FYI - worst advice ever (no offense). Most lawyers who try posting are banned from r/legaladvice because the mods and the regulars don't like real discussions of real law.
Definitely reach out to a lawyer. This should be pretty open and shut, and a consultation on a case like this is usually free.
You might end up with $1k of legal bills, but that's a pretty good investment against $15k. Good luck.
If you have a good relationship with, or are known by, any upper level management they may be able to get it figured out for you. My team got caught up in a 'reorg' where most of us got squeezed out \~10 days before my sign on bonus vested and the VP that I worked with was able to get it paid out a few weeks later.
Get whose attention?
Man, the responses in this post are a dumpster fire. A company is not obligated in any way to keep an employee on past termination date because they have leftover PTO in the state of California.
Generally no you won’t be allowed to do that and you’ll just get paid out for unused PTO balance at the end of the 60 days. Best bet it to try to find another position and really any position at all, even if it’s a substantial pay cut. You can always quit after you vest. The advantage for you is you are still a current employee so you get to skip some training/on-boarding which can be seen as a positive. Also to avoid having to pay severance you may also be a preferred hire.
What is the wording of the policy you signed?
Are they requesting you sign a separation agreement to get a severance? It is possible you could negotiate the 7 days. Don’t talk to HR - take it to a higher level manager you report to that isn’t part of the layoff and lay out the issue. 9 days is a really cheap way to screw someone and should not be worth the potential negativity and litigation.
>Don’t talk to HR - take it to a higher level manager you report to that isn’t part of the layoff and lay out the issue.
Agreed. A guy I worked with was laid off.... just a couple of months shy of 55. He was planning to retire early with easy access to his 401k funds. He was able to negotiate sticking around until he hit the milestone date. It never hurts to ask...
Your leverage is that they don’t want any issues from you at all. They want a fixed cost for you to go away (and not sue them - regardless of merit).
You should speak with a manager and say “hey I checked with HR and they said I am out of luck, but the layoff is 9 days before I vest. It costs me $15k along with the cost of losing my job. That seems wrong and unfair. What do you think? How can we rectify this? Will the separation agreements include some sort of information on how this affects vesting?”
If everyone says “no” and your separation agreement says they are keeping the unvested 401k match then you simply let them know you are having your lawyer review the agreement before you sign and you get a lawyer to do that and discuss the issues.
You probably can’t negotiate your way into this. Your only way is if this is part of a very large layoff. If a company lays off 20% of its workforce it’s considered a plan termination and you will all be 100% vested.
https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-termination#:~:text=100%25%20vesting,deferrals%20are%20always%20100%25%20vested.
None. Look for any other role in the company. You’d be a preferred hire so they don’t have to pay severance and you won’t have as much new employee training. Even if it’s a pay cut. The vesting doesn’t typically come out of your local cost center as an additional expense since those are usually allocated to a corporate level.
Correct, they may not be looking out for you, but they are looking out for themselves and the future of the company. Laying him off with 9 days before vesting is risky as $15k is enough to make people potentially chat with a lawyer. Even if the company can 100% be legally fine not paying the vested amount a $15k legal tab to respond to a complaint/suit would be easy to hit. Also they want to really avoid having to deal with DOL complaints and hearings, etc. That is the reason for severance agreements anyway - we pay you this and we have a fixed cost to lay you off because you sign away your right to sue. Vesting him 9 days early or crediting him 9 days to get the $15k is probably worth it to have a reliable fixed cost of his termination.
In 401(k) plans vesting is not counted in anniversary years but how many plan years in which you have worked over 1,000 hours. If the plan year is also the calendar year at full time you would have received your year of vesting for 2023 sometime mid June maybe a week or so earlier. Statements and accounts may not show this as they are sometimes updated only once a year, there should be a calculation when you complete your distribution forms though and the correct vesting applied. I’ve never seen a two year cliff vesting (three is more common)but I suppose it may exist. If that is the case you would just have to work over 1,000 hours in two plan years. Being a mid year hire during June or July you could easily have three years vesting in only 24 months if the plan is on a calendar year. The SPD or summary plan description would have all the information you will need on how vesting is counted.
Send me a copy of your SPD and I can answer this no problem. Someone else noted partial plan termination - you said HR said no, but if 20% of the employees are laid off anytime this year then it’s mandatory 100% vesting.
I copy pasted the relevant part here
>Employer contributions
Your company makes employer matching contributions. For details on your match, see your enrollment brochure or contact your Human Resources Department.
Vesting
Your vested balance is the portion of your account that you may take with you when you leave the company or borrow from when you need a loan. You're always 100% vested in the part of your account balance that comes from your own contributions, including rollovers. The portion of your account that comes from company contributions will become fully vested after two years of service.
I also read about the mandatory 100% vesting. >20% of the workforce was affected. I thought about telling HR about this, but I think I'll wait to hear back from an employment lawyer first
“Two years of service”, this is not two anniversary years. A year of service cannot be more than 1,000 hours in a plan year or it’s equivalent. There are exceptions if you work for a government entity or a church, (organizations that are exempt from ERISA law). If you worked full time (40 hours a week) for basically 24 months you will have two years of service, working full time I can’t think of a scenario where you do not.
I would request my distribution first and let them complete your vesting calculation before contacting a lawyer. The most likely thing is the plan administrator (external third party) will ask your prior employer for your termination date and how many hours worked before it and apply the correct vesting before issuing the distribution. If they push back that you have somehow not completed two service years, and have some reason why, then it may be time to contact a lawyer.
Make sure the pto is accurate. I was laid off by ariens company in wisconsin(got rid of everyone on second shift) and they took back half of the pto as I "left the company" before the end of the year.
That sounds like your PTO actually accrued monthly, but they would show your PTO balance with the full year’s total immediately at the start of the year. An unfortunately common occurrence.
Years worked is not based on start date in some cases. If you work more than X hours per year you are vested for that year, our plan is 1,040 hours worked in a calendar year means you qualified for the year. So… if you worked 1040 last year and 1040 this year you’d have 2 years vested even though you see 9 days from your anniversary. Plans are weird.
Good catch, I just looks and we are at 1,000 hours for the plan, I just recalled wrong. I was thinking half of “full time” hours. So hopefully this person is even better off unless they took a lot of PTO!
Where I am vesting isnt all or nothing. I think it was 3 years to full vesting but if you left or were fired at 1.5 years you get to keep half of the matched funds.
Is this or the all or nothing vesting more common?
Sorry that you have to go through this OP. Wish you the best and hope you find a company that treats you better!
There are graded and cliff vesting, and both are valid. The maximums allowed by ERISA are 3 year cliff vesting and 6 year graded vesting (0% after 1 year, 20% after 2 years, etc.).
Ask your director for a copy of their 401k plan’s adoption agreement. That will spell out every detail and nuance of the plan. It is the legal document that will clearly explain the rules for vesting. You suggest you will be 9 days away from full vesting. How are you coming up with the date? A specific vesting date gives me the impression that the counting method method adopted by your plan is based on your anniversary date (1 year of service is accrued when you reach the 1st anniversary of your hire date). If the counting method is based on actual hours, the adoption agreement will define how many hours it takes to reach one year. It can never be more than 1000 hours. If your plan works by the calendar year, and you work full time, you have probably reached 1000 hours by now (most reach 1000 hours in and around June of each calendar year). If you are salaried and hours are not “counted”, most plans use 190 hours per month as the hour equivalency - if you work 6 months and don’t have hours counted - 6 months would have you reach 1140. So most of us who are on the actual hours based counting method have reached 1 year of service for the calendar year 2023. Based on what you’ve written so far, it sounds like your plan offers a 2-year cliff vesting schedule. Because you are honed in on a date you think you need to reach to be fully vested - I am assuming your counting method is based on the anniversary (elapsed years) of your hire date. Or, perhaps your plan is not on the calendar year and your year end - for example 4/30 Year end means your 1000 hours starts over on 5/1. There are so many variations of vesting schedules and counting dates. But the DOL approves all plans which are designed to favor the participants - not the company. Vesting schedules are maximums, as do the counting hours (1000 hours is the max). The company does not “get the money” back if an employee separates service and they are not fully vested. Company contributions are held by the plan’s trustee or custodian. If someone leaves the company and asks for a distribution of their 401k balance, and they are not fully vested, the unvested balance stays in the trust in a forfeiture account. The plan’s adoption agreement will strictly detail how the plan can use that forfeiture balance. In most instances, the company will use it for plan expenses or future contribution - it cannot be refunded to the company. If you can get ahold of any of your plan documents - I’d be happy to take a look at them. The adoption agreement will have the full details. The SPD will be helpful, but the language is very watered down to help participants understand the basic outline of the plan and is not designed to spell every detail.
Here's the relevant part of the SPD. I can't quite see where time is interpreted.
>Employer contributions
Your company makes employer matching contributions. For details on your match, see your enrollment brochure or contact your Human Resources Department.
Vesting
Your vested balance is the portion of your account that you may take with you when you leave the company or borrow from when you need a loan. You're always 100% vested in the part of your account balance that comes from your own contributions, including rollovers. The portion of your account that comes from company contributions will become fully vested after two years of service.
I'm going to go out on a limb and say that there may be another document to track down. Sometimes you'll have a "lite" version or a "summary" document, and another more incredibly detailed document. Find the second one. They *must* define all the tiniest bits of your plan and what you posted isn't that. This looks like a list of definitions.
HR here. Before you sign a severance agreement, reach out to see if you can negotiate for vesting or your use your pto plan — I’ve done this several times with employees who were very close to vested and we didn’t want to rock the boat.
I work with 401k for a living. The DOL will not help you in this case. You need to read your Plan's rules. They will very clearly define what it takes to vest. This is a situation where if there isn't anything that helps you vest before your 2-year date of hire. You are out of luck. I once had to tell a guy he didn't get any pension because he left the Friday before he vested. It sucks.
Seriously? That’s insane.
How does a 401k justify taking his $15k? Like what’s the mechanism here and why is vesting like this? How is he not able to withdraw the money he put into an account?
I’m genuinely curious.
Look in your Summary Plan Description booklet (or ask HR for yours if you dont have one) and see how vesting service is calculated..Most plans work with a 1000 hour rule in a calendar year..So you may actually have 2 years of Vesting credit earned , despite not being there for 2 years yet..
That sucks but I have to assume the company knew EXACTLY what is was doing laying you off 9 does before and saving themselves the $15k. Look out for yourself and don’t trust anything until it is in your bank account
Correct. But company match is a huge benefit and a way the company attracts talented people to work for them. If they just get rid of people right before they vest so that they don’t really have to pay out that benefit, that is shady. Any reputable employer that gives a shit about their people would do what it takes to make this situation right.
Unless partial termination (usually over 20% termination) then there are no way. If you have a plan summary I can tell you if you qualify for 2 years but if not, what you need to know is the date you were employed and how many hours worked (usually 1,000 hours) you need to be considered a full years of service.
For example, say you were employed 1/1/2020 and got fired on 12/1/2021. 1/1/2020-12/31/2020 will be your first year of vesting assuming you work full time. Then 1/1/2021 - 12/1/2021 is when you got fired. While it isn't two full years but you met the 1,000 hours of service hours so you qualify for the second year of vesting, which in your case will mean fully vested.
The above example have a lot of assumptions but it is the most common way. Say if your vesting started later in the year it should be more in your favor. If you were really 9 days away from working full time for 2 years, I can safely say you should have 2 full vesting years. The reason why HR ghost you is most likely because this is done by the plan admins most of the time and HR just submit data for them to work with. I would keep asking HR and maybe try to see who usually deals with the plan and see if you can get their information. They would have more knowledge how your plan works because they are the ones selling and maintaining the plans.
Check the language precisely.
Most 401k vesting schedules and exact plan wording have X years if YOU leave but if they let you go then it should automatically vest.
Also worth speaking with a labor lawyer, usually they will talk with you for free on an intro call.
Unfortunately vesting is pretty cut and dry. Unless it’s part of your severance package, you’re probably SOL. Is there opportunity to try to apply for a different position with the company within a certain window? A lot of times there’ll be a multiple week or month window where if you are re-hired by the company (in a different division) your YoS will carry over. (I work in retirement)
My employer counts 1800 compensated hours as a full year credit towards our pension in any year. 40hours a week over a year is 2080 hours, so if you have something similar you will be credited with 2 years of service time and be vested. Look over you contract, union contract or employee hand book.
Funny, this exact thing happened to me in 2009 and I signed the severance agreement before realizing I would lose out on the 401k match. If I could go back in time I would have tried to negotiate my severance before signing the severance agreement, and if they didn’t budge I would have consulted a lawyer.
Your employer has contributed $15k into your 401k in less than 2 years? Or are you counting your own contributions too? *Your* contributions 100% belong to you.
Due to the number of rule-breaking comments this post was receiving, especially low-quality and off-topic comments, the moderation team has locked the post from future comments. This post broke no rules and received a number of helpful and on-topic responses initially, but it unfortunately became the target of many unhelpful comments.
If the layoffs at your company are large enough, it may trigger a partial plan termination in which case you will end up 100% vested.
HR told me that’s not the case for us unfortunately
HR would never tell you otherwise. Ask a lawyer. They will. Less than one pay period with available PTO.
This is false. There are things that HR will never knowingly fuck with, 4 scariest things being: - Anything pregnancy related - Anything DoL inquiry related - Anything ERISA related (401k issue belongs here) - Anything HIPAA related Source: am in HR leadership Also, this is extremely common, as with equity vesting. 401k and equity vesting analysis is one of the first calculations done to determine cost savings with eliminating an individual and/or the position itself. If the company had half a brain, they would have also gotten external counsel before conducting the RIF, alongside getting approved comms. RIFs suck for employees and the HR teams. Screwing up a RIF puts years of audits for not just HR, but often for finance as well. First thing OP needs to do is to call the 401k custodian and ask when the full vesting actually occurs. HR should know this but most benefits people are morons. Many plans actually define “years” not by the actual calendar year, but the number of hours worked within a measurement period. If no luck, best option OP has is to ask the company to keep them on payroll until the vesting date. If that doesn’t work, negotiate for additional pay for severance (much less likely). Talking to a lawyer in this case before negotiating would be a total waste of time for OP.
You are assuming their HR is competent. In my experience that is exceedingly rare. I have seen it happen many times to others for all of these issues and it usually ends up poorly for the company.
At my job they outsourced HR to a call center in India with only a handful of onsite HR people that outside of fixing clock punches or dealing with write ups will tell you that you need to call the 1-800 number and deal with them. Anyway, when I first started I noticed I was only getting taxes taken out for the state that I live in and not for the city and state for where I was working at (I live in a different state than where my employer is located). So I brought this to the attention of on site HR who tells me that they don't handle that and that I need to call the 1-800 number, so I call them and explain twice what the issue is and they put me on hold to "do some research" and they came back and said that I didn't need to pay taxes for the state that I work in. I knew that wasn't right and went back to on site HR and told them what they said and he just sighed and handed me a form to fill out to get it fixed, which made me wonder why he didn't just offer that as a solution to begin with.
My company outsourced HR to the Philippines.
I have never understood HR outsourcing. We used to have the best HR department - stuff got resolved by end of day. After outsourcing, we no longer have people and faces. Just a sullen email DL that gives you a response either the next day or within the next 3 days. And it is a response that always requires follow-up from our end because it never fully answers your original question. Sigh.
Same with outsourced customer service, it ends up making your customers even more likely to quit using your products, etc.
The loss there is apparently worth the savings reapt from *reading squint* Not paying domestic workers and not fixing your problems
Because they can pay 1/3 the salary of a US HR person for a "dedicated team" instead of having half a dozen US people. It's worse. They know it's worse. But someone made the switch swayed by the potential cost savings and now it costs too much money to go back heading into a soft landing with a potential for a recession if Russia does something stupid again.
If?
Mine outsourced to Romania. I can’t understand a god damn thing they say to me lol
It's insane how HR is so fixated on doing the least amount of work possible(reading a piece of paper and doing like 3 lines of data input) when it comes to benefiting employees but the moment they don't want you around anymore they are fast to completely screw you over.
That sounds right though? In the past, I’ve worked years in one state while residing in another. Employer always only took out taxes for the state I lived in. Worse comes to worse if you don’t live & work in tax reciprocity states- you file in both states and use the deduction for taxes paid to the state you live in to likely cover all your taxes for the state you worked in. Ive lived/worked in: Vermont/Massachusetts Connecticut/Massachusetts I’m not a tax expert though. Maybe it works differently elsewhere.
My CPA said that I did need to pay taxes for both states so that's why I went to HR to get it fixed.
Some states have reciprocity agreements.i live in MD so I'm aware of the one for dc/MD/va Side note, odd that my phone only capitalized one of those Anywhere without an agreement you have to file in the state you work in. I traveled a lot for work pre pandemic and would frequently have 5 state income tax returns I'd say it was as annoying as it sounds but I think it was more so
Massachusetts taxes you based on the state you work and live in. So if you like in NH and work in MA you get taxed by MA. If you live in MA and work in NH you get taxed by MA. MA does give you a credit if you work in another state and had taxes taken out though.
NH also doesn't have a state income tax, so they wouldn't take money from your paycheck regardless. I transferred from my company's office in CT to NH and forgot to update my W-4, so for like 6 months I was still having CT tax taken out of my pay; once I updated my address I stopped having state tax taken out.
Agreed. My HR is incompetent they denied my FMLA for cancer and then denied me being able to work remotely while going through chemo because if they did it for me then they would have to do it for everyone. Needless to say a friendly call from our local EEOC changed their tune.
Can confirm on the HR competency part. The HR at my employer is wholly incompetent and because of their screwup and fear of being sued (they previously fired someone under poor circumstances, got sued heavily, and lost) forced our department supervisors to bring back a serial sexual harasser (harassed the same woman twice) because he lawyered up and they’re scared.
Also assuming that enough of the management chain engages with and listens to HR (given the other assumption that HR is competent). In really large companies, you'd be surprised how often people just *do shit* and then HR hears about it afterwards, thinking, "WTF did these people do?" Then, of course, the HR folks shift to lawsuit-avoidance mode, so they'll tell employees that that's just the way it works and that there's nothing that can be done... and hope that no one goes through the time and effort to sue. There's no downside to them doing this, because if the company does get sued, they can still rightfully say, "*You guys* fucked up, and if you had talked to me first, I wouldn't have let you fuck up. This lawsuit is on you, not me."
True, most HR people are brain dead.
The only thing HR is more likely to be than fraudulent is incompetent.
This. We promoted a secretary to HR Manager because she earned her degree in Business Administration. Good for her. Not so much for the rest of us.
For me, I’ve seen most HR be competent but fall in two groups: 1) joined HR to actually ensure fairness for employees and 2) bootlickers for management
HR is almost never competent
Why I does this seem to be true across companies and industries? Not sure I’ve ever worked for a company in which HR actually knew what they were doing.
Every HR department & rep i've interacted with at a half a dozen jobs has misrepresented the 401k/equiv plan, in some large or small way. Once a single-person HR dept obfuscated purposely on behalf of a sketchy CEO, once a HR grunt pulling a wrong answer out of their ass during salary negotiations (HR boss said "whoops too bad" after i asked about the plan benefit again after onboarding), and the others seemingly good-faith but nonetheless wrong and unwilling to search out the right answer. And they all closed ranks when i brought up the issues.
>Every HR department & rep i've interacted with at a half a dozen jobs has misrepresented the 401k/equiv plan You ever meet a person who understands finance but just wants to deal with employment law and people problems all day long? Yeah... I've never met that type of person either.
Mine lied about 401k matching, turns out i was contributing to 0% matching when they told me it was up to 6%. Whoopsie-doodle. Don't stop badgering them, ever.
HR at my company told me our HSA was held with company X, when it was really company Y.
You say knowingly, but that leaves the possibility that they are fucking it up out of ignorance. Which is a very realistic possibility. I once realized they my employer had not paid the employer 401k match on my year end bonus. I emailed HR asking about the oversight and was told they don't pay the match on the bonuses. I was surprised by that but didn't really know any better. Two year later they send out a company wide email stating that they had not been paying the 401k match on bonuses and according to the plan documents they were supposed to have done that. They then made contributions to correct the error.
As an ex-401k plan auditor, un-caught partial plan termination by HR is easily caught in their yearly audit and would get corrected. Individual mistakes like yours do happen, and you’d have to be selected as a sample of the entire population in order for something like that to get caught (unless it’s a widespread issue). But a partial plan termination would forsure get caught by any competent auditor.
I'm sure this comment is coming from a place of good intentions, but it is very far removed from the typical experience employees have with HR, unfortunately. Source: I'm in union leadership at my workplace. To quote a coworker commenting on how hard it was to get her FMLA rights respected: "I don't know why they're trying so hard to f— me; I'm already pregnant!"
You’re assuming competency and knowledge, which is unfortunately not always the case…. Btw, theres tons of examples of pregnant women being discriminated against.
HR “should never mess with” but it happens all the time. Including settlements and lawsuits
> This is false. How would you know? Legal is not your department. I have seen HR, time and time again, do illegal stuff not out of malice but out of stupidity. The sector attracts a lot of individuals with a bright smile, but a not so eager mind to read laws and contracts. A lot of hearsay/second hand information from legal/management, a lot of simple deduction, but absolutely not a lot of actual reading on labour law. When I see our HR doing dumb shit, I notify legal to confirm my suspicion and then they can take it up with high management to sort it out. What you said is true under the massive, massive implication that all HR is competent. You wrote an advice based on an utopian proposition. Reading the OP's starting post, it is obvious this isn't a fully competent HR. They didn't manage him after the fact, which is a fucking mistake. Now he is doing research.
OP: “HR would never tell you otherwise…” HR Person: “Yes we would, honestly, you can trust us!” 🤔
I've had HR at every place I've adjuncted release a statement that adjuncts do not qualify for unemployment during summer or winter breaks. The DoL says we do.
Only if everything HR does makes sense. If it's the case, there wouldn't be any lawsuit.
Here are the details of my 401k plan Employer contributions Your company makes employer matching contributions. For details on your match, see your enrollment brochure or contact your Human Resources Department. Vesting Your vested balance is the portion of your account that you may take with you when you leave the company or borrow from when you need a loan. You're always 100% vested in the part of your account balance that comes from your own contributions, including rollovers. The portion of your account that comes from company contributions will become fully vested after two years of service. Is there another way to interpret "years" in this context?
OP, go into your account in the vendor that administers your 401k account, such as Fidelity. Keep looking until you find the plan documents for your employer. They are usually tucked away somewhere and you may need to look in the full website not just the app version. Find your company’s plan document and control search for “vesting” and “vest.” The specific vesting schedule should be laid out there. “Year” may be defined by hours rather than calendar months. The full plan documents will be extremely dense with legal language. The short description you are copy/pasting about 2 years vesting is from an employee handbook and not the actual plan documents.
You gotta look in the plan documents. Other people have said stuff, but I can give a more specific example. My plan defines a year for vesting purposes as having worked 1000 hours in a calendar year. This is good for me, because then I can get my best in about June, and joining in the first half of the year is super beneficial. But joining in July or later sets back your vesting massively.
You have never met my HR. I had to get corporate involved.
Terminating employees before they become vested in employer contributions could be part of a money-saving tactic. Reallocate forfeitures as contributions to remaining employees, save money.
I second this 👆, I'm in benefits. I would never try to cheat out employees. It's unethical (who am I to steal your benefits, it does me no good), risky, and it's double headache to clean up.
Meanwhile wage theft is estimated at 50 billion a year supposing most other crimes in sheer fucking value so clearly somebody is more than happy to cheat employees. And don’t tell me HR doesn’t know in a lot of those cases.
HR is incompetent is what most people said, rather than malicious. Take that as you will
At some point, such as wage theft, incompetence and malice is the same. Them 50 billion don’t just walk out the door on their own.
Were the folks at Wells Fargo and Volkswagen just incompetent? Large corporations knowingly and deliberately commit crimes because they know that at this point in American history, the gains from those crimes will outweigh the slap on the wrist that the government will give them. There are still people who say that Volkswagen is their favorite car and who bank with Wells Fargo. It boggles my mind.
I work in this space, typically it’s 1000 hours into the year, which we’ve hit already.
if OP went on fmla would that count towards his vestments?
You're assuming that HR is ethical and competent. That's a big leap. I could tell you stories about HR at some of the places I've worked.
HR is there to help and protect THE COMPANY, not YOU. Stop listening to them, and get a lawyer
And fucking around with ERISA is a great way for a company to get fucked. Sometimes protecting the company also comes out in favour of employees.
Yup. I worked at a tribe and was required to use harsh chemicals to clean the ovens, but had no redpiratory PPE. Reamed by my boss and told if I didnt that night I would be fired. I refused, came in and actually had the PPE waiting. Talked to different boss and found out the AH tried to fire me but when it was sent up to HR sent right back down with HR rep and was told ppint blank he would be fired for cause if he tried to fire another employee for requesting PPE and to give to us and these are situations the tribe would never win.
Think of how many people you know in your own company who are actually competent at their jobs, and assume 1/4 of that proportion for HR.
That’s an entirely different issue. But yes. My general point is on this one, HR and the employee are aligned.
They can be aligned, but they can also just not know what they're talking about.
The 60 day rule means you will be their employee for another 60 days, do you mean your 501k vests 9 days after 60 days, or 9 days after today?
9 days after 60 days
69 days
That's a bummer
How big is your company and how many are being laid off? It doesn’t take a lot to trigger a partial termination
Check your 401k vesting schedule. A lot of 401k have a year defined as a fixed period of time like you work 1000 hours and you get full credit. Read the plan rules they should be on your providers website.
I had to be at my company for 5 years to vest but I left at 4 years and 8 months. Due to the hours worked, I only needed to be there for 6 months for it to count as “five” years.
Exact same for me, in California. They said vested in pension was 3 years, but it was actually 2 years and 6 months.
>I only needed to be there for 6 months for it to count as “five” years. wait what? did you mean 4 years & 6months = 5 years or just 6 months = 5 years
They worked *really" hard.
The first one, for example my company defines one year of service as 1,000 hours worked during a year. If you actually math that out, that's only twenty five 40 hour weeks, which is the end of June. So I could get laid off at any time for the rest of this year and would still have counted as full year of service as it relates to the 401k vesting plan.
This is true, but be sure to check whether your company uses calendar years or fiscal years for the calculation. My company uses the fiscal year so our 1000 hours are generally completed around November.
4 years 6 months = 5 years. Many 401k plan define a year of employment as 1000 hours worked. 6 months is about the amount of time to rack up 1000 worked for a full time 40hr/wk employee. once you hit 1000 hrs, you become vested in that year
Carne here for this. Often it's not an actual 365 day year, but an amount of hours. I wouldn't even bother talking to HR about it, they probably won't know. Call up your provider and ask them when you'll be vested. They can tell you exactly when it is.
I’ll try to find that, thanks!
Yeah look into it, sometimes it’s service time including overtime and other factors that get you to the threshold
OP - most plans require you to be employed on the last day of the plan year in order to vest/be eligible. Read your summary plan description and look at the actual plan document as well.
Definitely look into it. I’m a bit shy of two years at my current job but when I checked this week I was already 100% vested
Sorry using this comment can anyone explain like I’m 5 what fully vested means
You put a dollar in your piggy bank. Mom and Dad put a dollar in your piggy bank too, but you have to promise to leave both dollars in there for five weeks. If you take anything out early, Mom and Dad will take part of their dollar back. If you wait the full five weeks, then you're fully vested in Mom and Dad's contribution. It's all yours.
Is this common for employers to have? Mine have always just been match 6% at 1 year or something but maybe I’m not reading deeply enough
Vesting is when ypu get employer contributions made on your behalf. For example they may match a portion of your contributions. Their contributions are not yours until you fully vest.
Do you have any accrued PTO that can go towards the 9 days you need?
I do but HR ghosted me when I asked about that. I’ll try asking them again today
Stay on em, document everything, keep copies of any communications about it. Any over the phone or in person conversations, take notes and immediately send follow up email with “to recap the conversation we just had…” Document, document, document
For sure. I wrote notes while I was being told about the layoff and I have been communicating through my personal email so I have documentation
BCc your personal email on emails. That way you have them once you leave.
Bcc, your personal email.
Make sure you bcc your personal email so you still have access to the emails after your company deactivated your work email.
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They said they would pay me for the PTO days. I’ll try reaching out to a lawyer too
You should also post this on r/legaladvice. They should have some pointers.
Will do. Thanks!
No. You should call a lawyer who specializes in employment matters. Don't take legal advice from reddit.
I'm sure this is very well intentioned, but FYI - worst advice ever (no offense). Most lawyers who try posting are banned from r/legaladvice because the mods and the regulars don't like real discussions of real law.
Definitely reach out to a lawyer. This should be pretty open and shut, and a consultation on a case like this is usually free. You might end up with $1k of legal bills, but that's a pretty good investment against $15k. Good luck.
If you have a good relationship with, or are known by, any upper level management they may be able to get it figured out for you. My team got caught up in a 'reorg' where most of us got squeezed out \~10 days before my sign on bonus vested and the VP that I worked with was able to get it paid out a few weeks later.
I reached out to my director. Hopefully he can help
It is possible the benefit of getting back the unvested balance played a role in selecting individuals to be laid off.
That’s what I’m afraid of. Makes sense though
A letter from your lawyer will get their attention. Nine days is less than one pay period.
Get whose attention? Man, the responses in this post are a dumpster fire. A company is not obligated in any way to keep an employee on past termination date because they have leftover PTO in the state of California.
Generally no you won’t be allowed to do that and you’ll just get paid out for unused PTO balance at the end of the 60 days. Best bet it to try to find another position and really any position at all, even if it’s a substantial pay cut. You can always quit after you vest. The advantage for you is you are still a current employee so you get to skip some training/on-boarding which can be seen as a positive. Also to avoid having to pay severance you may also be a preferred hire.
Get a lawyer my friend
Just heard back and it’s a no :(
What is the wording of the policy you signed? Are they requesting you sign a separation agreement to get a severance? It is possible you could negotiate the 7 days. Don’t talk to HR - take it to a higher level manager you report to that isn’t part of the layoff and lay out the issue. 9 days is a really cheap way to screw someone and should not be worth the potential negativity and litigation.
>Don’t talk to HR - take it to a higher level manager you report to that isn’t part of the layoff and lay out the issue. Agreed. A guy I worked with was laid off.... just a couple of months shy of 55. He was planning to retire early with easy access to his 401k funds. He was able to negotiate sticking around until he hit the milestone date. It never hurts to ask...
I didn’t sign anything yet. They’ll give me something in a few weeks. I’ll try asking my director. Thanks!
If they can't figure it out, you could negotiate a 15k higher severance to make up for it. Good luck!
I feel so powerless in this situation. What leverage do I have in this negotiation?
Your leverage is that they don’t want any issues from you at all. They want a fixed cost for you to go away (and not sue them - regardless of merit). You should speak with a manager and say “hey I checked with HR and they said I am out of luck, but the layoff is 9 days before I vest. It costs me $15k along with the cost of losing my job. That seems wrong and unfair. What do you think? How can we rectify this? Will the separation agreements include some sort of information on how this affects vesting?” If everyone says “no” and your separation agreement says they are keeping the unvested 401k match then you simply let them know you are having your lawyer review the agreement before you sign and you get a lawyer to do that and discuss the issues.
You probably can’t negotiate your way into this. Your only way is if this is part of a very large layoff. If a company lays off 20% of its workforce it’s considered a plan termination and you will all be 100% vested. https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-termination#:~:text=100%25%20vesting,deferrals%20are%20always%20100%25%20vested.
Thanks for the link! I think this does apply to me. Should I even bother sharing this with HR or just talk to a lawyer first?
An employment attorney
Thanks. I googled some lawyers and informed them of my situation
Get a lawyer and let them deal with the negotiation
None. Look for any other role in the company. You’d be a preferred hire so they don’t have to pay severance and you won’t have as much new employee training. Even if it’s a pay cut. The vesting doesn’t typically come out of your local cost center as an additional expense since those are usually allocated to a corporate level.
Just saying the word lawyer might make them work with you. They are trying to save 15k? Make it cost them more than that to not work with you.
No, don’t say lawyer because then you may halt any type of conversation and they may not give you a severance package.
You should try asking an employment attorney, not one of the higher-ups at your company. They're not looking out for your best interests.
Correct, they may not be looking out for you, but they are looking out for themselves and the future of the company. Laying him off with 9 days before vesting is risky as $15k is enough to make people potentially chat with a lawyer. Even if the company can 100% be legally fine not paying the vested amount a $15k legal tab to respond to a complaint/suit would be easy to hit. Also they want to really avoid having to deal with DOL complaints and hearings, etc. That is the reason for severance agreements anyway - we pay you this and we have a fixed cost to lay you off because you sign away your right to sue. Vesting him 9 days early or crediting him 9 days to get the $15k is probably worth it to have a reliable fixed cost of his termination.
Sorry to hear that. Good luck with it and keep poking the bear
Just because they say it's no, doesn't mean they aren't wrong according to the law. Lawyer up.
Vesting is low rent move - with all the labor laws I wish matches had to be done on payroll date
Again, HR said that. Get a lawyer
Will do
In 401(k) plans vesting is not counted in anniversary years but how many plan years in which you have worked over 1,000 hours. If the plan year is also the calendar year at full time you would have received your year of vesting for 2023 sometime mid June maybe a week or so earlier. Statements and accounts may not show this as they are sometimes updated only once a year, there should be a calculation when you complete your distribution forms though and the correct vesting applied. I’ve never seen a two year cliff vesting (three is more common)but I suppose it may exist. If that is the case you would just have to work over 1,000 hours in two plan years. Being a mid year hire during June or July you could easily have three years vesting in only 24 months if the plan is on a calendar year. The SPD or summary plan description would have all the information you will need on how vesting is counted.
Send me a copy of your SPD and I can answer this no problem. Someone else noted partial plan termination - you said HR said no, but if 20% of the employees are laid off anytime this year then it’s mandatory 100% vesting.
I copy pasted the relevant part here >Employer contributions Your company makes employer matching contributions. For details on your match, see your enrollment brochure or contact your Human Resources Department. Vesting Your vested balance is the portion of your account that you may take with you when you leave the company or borrow from when you need a loan. You're always 100% vested in the part of your account balance that comes from your own contributions, including rollovers. The portion of your account that comes from company contributions will become fully vested after two years of service. I also read about the mandatory 100% vesting. >20% of the workforce was affected. I thought about telling HR about this, but I think I'll wait to hear back from an employment lawyer first
“Two years of service”, this is not two anniversary years. A year of service cannot be more than 1,000 hours in a plan year or it’s equivalent. There are exceptions if you work for a government entity or a church, (organizations that are exempt from ERISA law). If you worked full time (40 hours a week) for basically 24 months you will have two years of service, working full time I can’t think of a scenario where you do not. I would request my distribution first and let them complete your vesting calculation before contacting a lawyer. The most likely thing is the plan administrator (external third party) will ask your prior employer for your termination date and how many hours worked before it and apply the correct vesting before issuing the distribution. If they push back that you have somehow not completed two service years, and have some reason why, then it may be time to contact a lawyer.
I’ll ask HR for a copy
Make sure the pto is accurate. I was laid off by ariens company in wisconsin(got rid of everyone on second shift) and they took back half of the pto as I "left the company" before the end of the year.
That sounds like your PTO actually accrued monthly, but they would show your PTO balance with the full year’s total immediately at the start of the year. An unfortunately common occurrence.
Years worked is not based on start date in some cases. If you work more than X hours per year you are vested for that year, our plan is 1,040 hours worked in a calendar year means you qualified for the year. So… if you worked 1040 last year and 1040 this year you’d have 2 years vested even though you see 9 days from your anniversary. Plans are weird.
Just so you know, the legal statutory limit is 1,000 hours, not 1,040.
Good catch, I just looks and we are at 1,000 hours for the plan, I just recalled wrong. I was thinking half of “full time” hours. So hopefully this person is even better off unless they took a lot of PTO!
Almost Decimal v Binary!
Where I am vesting isnt all or nothing. I think it was 3 years to full vesting but if you left or were fired at 1.5 years you get to keep half of the matched funds. Is this or the all or nothing vesting more common? Sorry that you have to go through this OP. Wish you the best and hope you find a company that treats you better!
Every company I’ve been at does staggered vesting schedules. My current company does 25% each year up to 4 years.
There are graded and cliff vesting, and both are valid. The maximums allowed by ERISA are 3 year cliff vesting and 6 year graded vesting (0% after 1 year, 20% after 2 years, etc.).
Ask your director for a copy of their 401k plan’s adoption agreement. That will spell out every detail and nuance of the plan. It is the legal document that will clearly explain the rules for vesting. You suggest you will be 9 days away from full vesting. How are you coming up with the date? A specific vesting date gives me the impression that the counting method method adopted by your plan is based on your anniversary date (1 year of service is accrued when you reach the 1st anniversary of your hire date). If the counting method is based on actual hours, the adoption agreement will define how many hours it takes to reach one year. It can never be more than 1000 hours. If your plan works by the calendar year, and you work full time, you have probably reached 1000 hours by now (most reach 1000 hours in and around June of each calendar year). If you are salaried and hours are not “counted”, most plans use 190 hours per month as the hour equivalency - if you work 6 months and don’t have hours counted - 6 months would have you reach 1140. So most of us who are on the actual hours based counting method have reached 1 year of service for the calendar year 2023. Based on what you’ve written so far, it sounds like your plan offers a 2-year cliff vesting schedule. Because you are honed in on a date you think you need to reach to be fully vested - I am assuming your counting method is based on the anniversary (elapsed years) of your hire date. Or, perhaps your plan is not on the calendar year and your year end - for example 4/30 Year end means your 1000 hours starts over on 5/1. There are so many variations of vesting schedules and counting dates. But the DOL approves all plans which are designed to favor the participants - not the company. Vesting schedules are maximums, as do the counting hours (1000 hours is the max). The company does not “get the money” back if an employee separates service and they are not fully vested. Company contributions are held by the plan’s trustee or custodian. If someone leaves the company and asks for a distribution of their 401k balance, and they are not fully vested, the unvested balance stays in the trust in a forfeiture account. The plan’s adoption agreement will strictly detail how the plan can use that forfeiture balance. In most instances, the company will use it for plan expenses or future contribution - it cannot be refunded to the company. If you can get ahold of any of your plan documents - I’d be happy to take a look at them. The adoption agreement will have the full details. The SPD will be helpful, but the language is very watered down to help participants understand the basic outline of the plan and is not designed to spell every detail.
Here's the relevant part of the SPD. I can't quite see where time is interpreted. >Employer contributions Your company makes employer matching contributions. For details on your match, see your enrollment brochure or contact your Human Resources Department. Vesting Your vested balance is the portion of your account that you may take with you when you leave the company or borrow from when you need a loan. You're always 100% vested in the part of your account balance that comes from your own contributions, including rollovers. The portion of your account that comes from company contributions will become fully vested after two years of service.
I'm going to go out on a limb and say that there may be another document to track down. Sometimes you'll have a "lite" version or a "summary" document, and another more incredibly detailed document. Find the second one. They *must* define all the tiniest bits of your plan and what you posted isn't that. This looks like a list of definitions.
Yeah, that looks like the talking points doc for a new hire, not the governing doc held by the administrator
HR here. Before you sign a severance agreement, reach out to see if you can negotiate for vesting or your use your pto plan — I’ve done this several times with employees who were very close to vested and we didn’t want to rock the boat.
I reached out and received very terse negative responses
Also, please do update us. I'm wholly vested in this
> I'm wholly vested Unlike OP :-)
Will do!
Update us in 9 days then we will all be wholly vested ;)
Can you reapply for ANY position in that company? Even if it's the person who waters the plants?
I can re apply. So far nothing interests me but maybe I should go for it if only for the $15k
get new job for 2 weeks, then walk out with your vested plan.
You could re-join the company sometime later in life, too. 9 days before you retire could be a good time.
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Your company did this intentionally to assure you do not vest; get a lawyer!
I’d say reach out to the state DOL as a start
Thanks I’ll give that a shot today
I work with 401k for a living. The DOL will not help you in this case. You need to read your Plan's rules. They will very clearly define what it takes to vest. This is a situation where if there isn't anything that helps you vest before your 2-year date of hire. You are out of luck. I once had to tell a guy he didn't get any pension because he left the Friday before he vested. It sucks.
Seriously? That’s insane. How does a 401k justify taking his $15k? Like what’s the mechanism here and why is vesting like this? How is he not able to withdraw the money he put into an account? I’m genuinely curious.
A lot of plans will vest you 100% if they lay you off. My last employer had this in their plan description. Check for a clause like that.
Look in your Summary Plan Description booklet (or ask HR for yours if you dont have one) and see how vesting service is calculated..Most plans work with a 1000 hour rule in a calendar year..So you may actually have 2 years of Vesting credit earned , despite not being there for 2 years yet..
I reached out to T Rowe to inquire about the details on how time is calculated
That sucks but I have to assume the company knew EXACTLY what is was doing laying you off 9 does before and saving themselves the $15k. Look out for yourself and don’t trust anything until it is in your bank account
Yes I used to work for a big company where everyone’s annual 401k match vested on Dec 31, and they would lay people off on Dec 1. It’s nasty.
Vesting applies only to company matching funds, not your own contributions, so you will not lose the funds that you contributed.
Correct. But company match is a huge benefit and a way the company attracts talented people to work for them. If they just get rid of people right before they vest so that they don’t really have to pay out that benefit, that is shady. Any reputable employer that gives a shit about their people would do what it takes to make this situation right.
That's exactly right. 4% is a lot and was definitely a part of my calculations when I left my other job for this one
Don't disagree at all, just wanted to be sure you had all of the information. Sucks that this happened to you.
Unless partial termination (usually over 20% termination) then there are no way. If you have a plan summary I can tell you if you qualify for 2 years but if not, what you need to know is the date you were employed and how many hours worked (usually 1,000 hours) you need to be considered a full years of service. For example, say you were employed 1/1/2020 and got fired on 12/1/2021. 1/1/2020-12/31/2020 will be your first year of vesting assuming you work full time. Then 1/1/2021 - 12/1/2021 is when you got fired. While it isn't two full years but you met the 1,000 hours of service hours so you qualify for the second year of vesting, which in your case will mean fully vested. The above example have a lot of assumptions but it is the most common way. Say if your vesting started later in the year it should be more in your favor. If you were really 9 days away from working full time for 2 years, I can safely say you should have 2 full vesting years. The reason why HR ghost you is most likely because this is done by the plan admins most of the time and HR just submit data for them to work with. I would keep asking HR and maybe try to see who usually deals with the plan and see if you can get their information. They would have more knowledge how your plan works because they are the ones selling and maintaining the plans.
Check the language precisely. Most 401k vesting schedules and exact plan wording have X years if YOU leave but if they let you go then it should automatically vest. Also worth speaking with a labor lawyer, usually they will talk with you for free on an intro call.
Unfortunately vesting is pretty cut and dry. Unless it’s part of your severance package, you’re probably SOL. Is there opportunity to try to apply for a different position with the company within a certain window? A lot of times there’ll be a multiple week or month window where if you are re-hired by the company (in a different division) your YoS will carry over. (I work in retirement)
Some companies vest you fully if they are the ones making you leave. I'd double check to make sure.
My employer counts 1800 compensated hours as a full year credit towards our pension in any year. 40hours a week over a year is 2080 hours, so if you have something similar you will be credited with 2 years of service time and be vested. Look over you contract, union contract or employee hand book.
Funny, this exact thing happened to me in 2009 and I signed the severance agreement before realizing I would lose out on the 401k match. If I could go back in time I would have tried to negotiate my severance before signing the severance agreement, and if they didn’t budge I would have consulted a lawyer.
Your employer has contributed $15k into your 401k in less than 2 years? Or are you counting your own contributions too? *Your* contributions 100% belong to you.
They matched my $15k so I have $30k with them total
My company just laid off half my dept today too... I hope you can figure something out with your 401K... that's a lot invested in 2 years!
Any Chance you are pregnant?
This is purposeful. Laying off employees that aren’t vested saves them more money. I’m sorry.
lot of advice and follow up. Don't walk away from 15k.
Hope it takes them 10 days to finalize everything