401(k)

[Preacherman2005]

What is the name of your state (only U.S. law)? Ohio. \
Would it be legal for an employer to take back money from my fully vested 401(k) plan?

 

[Ohiogal]

What is the name of your state (only U.S. law)? Ohio. \
Would it be legal for an employer to take back money from my fully vested 401(k) plan?

Please explain.

 

[cbg]

Under most circumstances, no. But I can think of at least one situation where they could. So you're going to need to provide details.

 

[Preacherman2005]

my wife heard a rumor at her work that they may be laying off people. if not they were also looking at taking money out of their 401(k) accounts. I told her that I thought the only thing they could do is to stop making matching contribution but as far as the amount that they would have already vested in the account the could not take that money.

 

[swalsh411]

That would not be legal and I doubt the plan administrator would allow it either..

 

[cbg]

Under those circumstances, no, they could not take money out of the 401k accounts, and they could only stop making the matching contributions if the plan document clearly states that they are discretionary. This is would be so unbelievably illegal that I can't believe the employer is seriously considering it - that sounds like rumor to me. And if they really are considering it, swalsh is correct - the plan administrator would stop it before it happened. 401k plans are audited regularly and you would not believe the size of the fine the employer would be hit with, or the number of people who would go to jail, if they were to go ahead with this.

So worry about layoffs, but don't worry about the 401k being decimated. Isn't going to happen unless the employer has a death wish.

 

[commentator]

Yep, some employee cooked this one up in their own little mind, I'd bet. And even if the employees were to offer up the 401K money, BEG the employer to take it instead of laying them off or closing the business, they couldn't and wouldn't.