Am I getting screwed by my company via 401(k)

Dimkaumd

Senior member
Dec 1, 2003
335
0
0
I just found out, after being at my job for almost 1 yr, that the money that my company matches for my 401(k) won't really be mine unless I work there for four years.

Not only am I not sure that I will want to work there for that long, but I am afraid our contract may run out, and I'll lose all of the matching.

My company never told me this, and I only found out accidentally recently.

Does anyone else here have these policies??

Thanks

--------------------------------------------------------------------------------------------------------
PS - Please visit My Site. We're working on adding financial articles and investment ideas. Visiting our advertisers will help a lot!
 

jamesave

Golden Member
Aug 27, 2000
1,610
0
76
btw, it may be vested 25% for every year. It will reach 100% until 4 years. of course, it varies. How many % do they match?
 

DaveSimmons

Elite Member
Aug 12, 2001
40,730
670
126
"Vesting" of matching funds over 4-5 years is normal for most companies, same with stock and stock option grants.
 

Dimkaumd

Senior member
Dec 1, 2003
335
0
0
Originally posted by: jamesave
btw, it may be vested 25% for every year. It will reach 100% until 4 years. of course, it varies. How many % do they match?

They match really well, 100% upto the first 6%, but I do not think they vest in 25% increments. It really upsets me that they are so secretive about it though!
 

msparish

Senior member
Aug 27, 2003
655
0
0
Vesting policy at my company:
20% after 2 years.
40% after 3 years.
60% after 4 years.
100% after 5 years.
 

kranky

Elite Member
Oct 9, 1999
21,019
155
106
Originally posted by: jamesave
btw, it may be vested 25% for every year. It will reach 100% until 4 years. of course, it varies. How many % do they match?

That's what our company does, and people seem to think that's a fair system. You're not getting screwed.
 

KLin

Lifer
Feb 29, 2000
29,705
258
126
401k at my old employer I was vested after 2 years. I also had a personal retirement account(% of my monthly income put into a T-bill account) that I was vested in after 5 years.
 

DaveSimmons

Elite Member
Aug 12, 2001
40,730
670
126
Originally posted by: Dimkaumd
Originally posted by: jamesave
btw, it may be vested 25% for every year. It will reach 100% until 4 years. of course, it varies. How many % do they match?
They match really well, 100% upto the first 6%, but I do not think they vest in 25% increments. It really upsets me that they are so secretive about it though!
Talk to human resources, you're probably wrong about that.

You probably also skipped the semi-annual 401k meeting where they went over the details you think they're hiding from you.

If not, how did you discover their sinister plot? ("My company never told me this, and I only found out accidentally recently.")
 

Dimkaumd

Senior member
Dec 1, 2003
335
0
0
Originally posted by: DaveSimmons
Originally posted by: Dimkaumd
Originally posted by: jamesave
btw, it may be vested 25% for every year. It will reach 100% until 4 years. of course, it varies. How many % do they match?
They match really well, 100% upto the first 6%, but I do not think they vest in 25% increments. It really upsets me that they are so secretive about it though!
Talk to human resources, you're probably wrong about that.

You probably also skipped the semi-annual 401k meeting where they went over the details you think they're hiding from you.

If not, how did you discover their sinister plot? ("My company never told me this, and I only found out accidentally recently.")

Well, my company is really small 7 people, and no HR dept. The woman responsible for HR is the owner's wife, and never mentioned any of the trickery.

I found out through a guy that used to work for my company, and after being forced out after 2.5-3 yrs there, he didn't get any of the matching.

I talked to a few other employees and they had no clue.

(I am perfectly fine with them vesting after several years, and I understand that they need to have an incentive for employees to stay, I just wish it was more open.)
 

Pliablemoose

Lifer
Oct 11, 1999
25,195
0
56
Well, yeah it sucks that they take so long to vest you, however, the earnings on the non vested money is yours to keep, if you separate before the 4 years, you take the earnings with you.

It's not ideal, but such is life...

Mine: (5% match)

Years of Service Vesting Percentage
<2 0%
2 25%
3 50%
4 75%
5 100%
 

richardycc

Diamond Member
Apr 29, 2001
5,719
1
81
I get 33%/yr, so after 3yrs, they are all mine. my wife's company's matched money is vested right away!
 

SoulAssassin

Diamond Member
Feb 1, 2001
6,135
2
0
Originally posted by: Dimkaumd
Originally posted by: jamesave
btw, it may be vested 25% for every year. It will reach 100% until 4 years. of course, it varies. How many % do they match?

They match really well, 100% upto the first 6%, but I do not think they vest in 25% increments. It really upsets me that they are so secretive about it though!

dollar for dollar up to 6% is pretty damn good
 

lupi

Lifer
Apr 8, 2001
32,539
260
126
Mine was vested after about a month. But then again, I get a pension too :)
 

DaveSimmons

Elite Member
Aug 12, 2001
40,730
670
126
Originally posted by: Dimkaumd
Well, my company is really small 7 people, and no HR dept. The woman responsible for HR is the owner's wife, and never mentioned any of the trickery.

I found out through a guy that used to work for my company, and after being forced out after 2.5-3 yrs there, he didn't get any of the matching.

I talked to a few other employees and they had no clue.

(I am perfectly fine with them vesting after several years, and I understand that they need to have an incentive for employees to stay, I just wish it was more open.)
That's odd, and a little suspicous.

Don't you have anything about your 401k plan in writing? If nothing else, you should be getting quartetly account statements for your mutual funds, and those should show the vesting percentage.
 

BooGiMaN

Diamond Member
Jul 5, 2001
7,955
0
0
are you sure all this is not stated in the 401k literature they gave you when you set up?

why would they hide it
 

TheNinja

Lifer
Jan 22, 2003
12,207
1
0
My company matches 100% up to 6% and I'm fully vested right away. Sad part is, some people still don't contribute 6% b/c "they can't afford it". Ya, I hate it when I can't afford an instant 100% return on my investment.
 

sjwaste

Diamond Member
Aug 2, 2000
8,757
12
81
I work for a large company and we vest 100% at the 6 year mark. We don't get matching, but we do get profit sharing (which is nice because it's not contingent on your own contribution). I contribute a large amount generally, but its nice to know that if I cut back out of necessity, I wouldn't miss the "free" money.

The bottom line is they want to encourage you to stay. Always factor it in when you go looking for another job.
 

Squisher

Lifer
Aug 17, 2000
21,204
66
91
My wife's stock awards, they've gotten away from stock options, work like this. (Golden Handcuffs)
 

Dr. Detroit

Diamond Member
Sep 25, 2004
8,265
725
126
One place I worked had 0% vesting until year 3 when you then became 40% vested. 20% each year thereafter until year 5 in which you became 100% vested.

Current firm is 20% each year, 100% at year 5. Profit sharing is immediately vested though. Pus a maximum of $2,000 match per year.

Get used to it!


 

Reel

Diamond Member
Jul 14, 2001
4,484
0
76
Mine just went from 2 - 20%, 3 - 40%, ... 6 - 100% to 1 - 25%, 2 - 50%, 3 - 75%, 4 - 100%. They don't start the match until 1 year of service either.
 

QED

Diamond Member
Dec 16, 2005
3,428
3
0
Vesting is VERY common... so for you to ASSUME there was no vesting period does not mean that they tried to hide it from you.

I'm guessing they use an outside company to handle their 401ks, right? If so, you should've gotten plan literature that would have told you what the vesting period is.

Also, in a lot of cases (i.e. layoffs) you become fully vested if the company decides to let you go-- although, again, this would be disclosed in your plan literature.