after 7 months on the job, the owner decided I was no longer needed. I was asked to resign nicely. Is it true that, according to IRS rules, company need to claim back their matching 401K contribution to my 401K? theCFO says, matching contribution vested only after 3 years!
2007-02-20 18:37:33 · 4 answers · asked by rafflesibmnet 2 in Business & Finance ➔ Personal Finance
yes, some plans have vesting periods. Maximum period for match vesting is 6 years. Although a company can have any period shorter than that. However, if it's a cliff vesting which means all or nothing...it can't exceed 3 years.
2007-02-22 08:14:36 · answer #1 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
The company can set the vesting period as it sees fit. The matching part sounds really great when they describe it, but the vesting part is always in the small print...
However, it is not the IRS that requires a vesting period. My employer's vesting period went from 3 years to 1 year to the end of the calendar year, i.e., all matching funds from 2006 were vested on January 1, 2007.
Effective this year, my firm changed again: the matching funds are vested monthly. They said their recordkeeping savings were worth the change.
2007-02-21 08:55:16 · answer #2 · answered by Chef dad 3 · 0⤊ 0⤋
Most companies have vesting periods (if not all). My company's period is five years. The point is to encourage you to stay with your company. It's unfortunate that you were laid off, but you are not legally entitled to the company match.
2007-02-21 03:50:47 · answer #3 · answered by lizzgeorge 4 · 0⤊ 0⤋
Yes, it is true. The company match is not yours. The money you put in is yours, though. Most companies have vesting plans.
2007-02-20 18:45:28 · answer #4 · answered by Anonymous · 0⤊ 0⤋