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Asked 1/8/2012
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My employer plans to stop contributing to my 401K plan before I become fully vested. Can my employer withdraw their earlier contributions to my retirement account? Employer plans to stop their contributions to 401K plan at the end of 2012. I will not be fully vested until 2013. Does this change affect prior employer contributions? |
Answer 1/1 - Submitted 1/8/2012
Good question.
No, your vesting schedule is a percentage of contributed funds, regardless of when they were contributed to the 401k savings plan.
You are 100% vested on your personal contributions from the moment they are added to your account. To entice employee longevity with the company, they typically will provide a separate vesting schedule for company contributions based on your years of employment with the company. (for example: 10% vesting for each year of employment with the company)
If the company stops contributing matching funds in the near future, they can NOT take back prior contributed funds they have provided to your account balance, though they can stop adding ADDITIONAL funds to your account balance. If they stop matching funds, your company vesting schedule will continue on the ALREADY DEPOSITED funds in your account that they provided until you are 100% vested on their portion of the contributions to your account balance.
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