401K cash out and vesting mistakes

[davebest]

New York

When I left a small employer last year(August 2005), I cashed out the 401K plan that I was in for only six months (Dec 2005). I was sent all of MY money and all of the employer's contributions ($434). I did this through the company holding the plan (ING Insurance) and the employer!

Now (June 2006) I receive a letter from a benefits administrator that represents my old employer and they tell me I have to give back the $434 because I was not fully vested. I don't feel this is right, mostly because I do not have $434 at this time. Also, I did not know anything about their vesting policy (verbal or written), and my employer and ING made the error, too!

My questions:

--Can I be held criminally liable for any of this, say, if I do not want to repay the money?
--If that answer is "yes", then I have no choice, but I don't have the money--what can I do?

Thanks.
[email protected]

 

[Betty]

Usually you need to be with an employer a certain length of time before your 401k becomes vested. (for example 1 yr.) If you leave your employer before you're vested, you are entitled to 100 % of your contribution + the interest earned on your contribution. However, you are not entitled to whatever your employer contributed. I know you said you worked for a small employer but are you sure there was no employee/employer contract, employee handbook, or anything in writing re terms of 401k plan re vesting, etc?