misinformation on 401k statements

[scadv]

I am in SC.
My 401k statements all say that I am 100% vested in my account. But when I recently withdrew the funds due to a separation of service, they withheld 50% of the match and claimed I was only 50% vested in the match. But for years now they have sent statements saying I am 100% vested.
Is there anything I can do? Are they not liable at all for years of mistakes and planning around these mistakes?

 

[Zigner]

I am in SC.
My 401k statements all say that I am 100% vested in my account. But when I recently withdrew the funds due to a separation of service, they withheld 50% of the match and claimed I was only 50% vested in the match. But for years now they have sent statements saying I am 100% vested.
Is there anything I can do? Are they not liable at all for years of mistakes and planning around these mistakes?

Let's say they are liable. What would they be liable for.

Assume that the statements were in error. What have you lost? The answer is nothing. You have lost nothing.

 

[ecmst12]

According to the actual vesting policy, should you have been vested?

 

[jiggy78]

Let's say they are liable. What would they be liable for.

Assume that the statements were in error. What have you lost? The answer is nothing. You have lost nothing.

Don't be foolish. Of course he has lost something. He lost the employer match which is a valuable benefit. It's a fringe benefit and part of the employee/employer package when a job is accepted.

Having said that, whether or not he was actually entitled to that match in the first place would be governed by the 401(k) plan document.

 

[davew128]

Well to be fair, based on ERISA, there is no vesting schedule that amounts to 50%. There is a time graded schedule which a legal minimum but it runs 20/40/60/80/100 http://www.dol.gov/ebsa/publications/wyskapr.html#.UJB9ALSlIeM

Now its possible two things have happened here.

1) The plan document was old and had a 50% vesting amount for the OP's time frame. This DOES NOT GOVERN THE PLAN. An out of date plan document not in compliance with law changes cannot be relied upon by the employer to the detriment of the employee

2) OP misread the documentation. It's highly unlikely a competent plan administrator would screw this up.

 

[tranquility]

Don't be foolish. Of course he has lost something. He lost the employer match which is a valuable benefit. It's a fringe benefit and part of the employee/employer package when a job is accepted.

Having said that, whether or not he was actually entitled to that match in the first place would be governed by the 401(k) plan document.

I believe that's what Zigner said. He just said it more efficiently.

 

[tranquility]

Well to be fair, based on ERISA, there is no vesting schedule that amounts to 50%. There is a time graded schedule which a legal minimum but it runs 20/40/60/80/100 http://www.dol.gov/ebsa/publications/wyskapr.html#.UJB9ALSlIeM

Now its possible two things have happened here.

1) The plan document was old and had a 50% vesting amount for the OP's time frame. This DOES NOT GOVERN THE PLAN. An out of date plan document not in compliance with law changes cannot be relied upon by the employer to the detriment of the employee

2) OP misread the documentation. It's highly unlikely a competent plan administrator would screw this up.

Retirement is hard and requires special training to be competent in. (5500? See your guy. 5500ez? Yea, you can see your guy too. I can fill in all the blanks [probably appropriately], but I don't like answering things I know little about.)

To my question; is the law important here, or the agreement? Is vesting the law, or the contract with the employer?

 

[cbg]

Money that YOU contribute is always 100% vested. Money that your employer puts in is vested according to the schedule indicated in the plan document.

There are two types of employer vesting - step vesting and cliff vesting. Step vesting means that you vest a certain percent each year; cliff vesting means that you vest all at once after a specific period of time; for example 3 years. In a 3-year cliff vesting, at 2 years and 364 days you are not vested at all, and on your 3 year anniversary you are 100% vested.

It would appear that there is some form of step vesting involved since 50% is mentioned for the employer match. That does not mean that the portion YOU contributed is not 100% vested - it is.

You will need to read the plan document and determine how many "steps" it take before the employer portion is fully vested. THE PLAN DOCUMENT RULES. If, according to the plan document, you are only 50% vested, then you are only 50% vested no matter how many statements you received saying otherwise. If, however, according to the plan document you should be 100% vested, then you need to bring that to the attention of the plan administrator.

 

[davew128]

Guys, whats in the plan document is irrelevant if its not AT LEAST as beneficial as ERISA. A plan document CANNOT change the law. Did anyone actually look at the link? (Here's a hint: I do 5500's) The only time a plan takes precedence is when the law ALLOWS something and the plan does not. In this case the law REQUIRES something.

CBG, the ERISA required minimum for step vesting HAS NO 50% step. So unless the plans step schedule has vesting at 50% by Year 3 or sooner, its not in compliance.

 

[jiggy78]

Would it be legal to have 25/50/100 vesting?

 

[cbg]

I don't have a quarrel with that, Dave. I'm not trying to establish what the vesting is for this poster, only to explain the types of vesting and give an opinion on which kind the poster has. My three year example - which, if you read my post, was for cliff vesting, not step vesting) was simply that. An example. I didn't say how many steps it took to get to 50%.

It is evident that the poster's plan has step vesting. That is all that is evident at this time and all I was saying.