This is trivial but during the summer of 2007 I had an internship with a very large international company. I think I worked somewhere around 500 hours.
They signed me up for a 401k. It had somewhere around $60 in it which would now be worth over $80 (if only I worked full-time for this outfit).
Anyways I checked my online statement this morning and all of a sudden I have nothing. On August 31st there is a message saying Termination Forfeiture Out and my account was debited to nothing.
What’s the deal here? It was totally voluntary me leaving the job.
I know it’s just $80 but money is money.
Am I right in assuming the money was what they contributed to the plan? I didn’t save any pay stubs but I don’t think they pulled any money out of my paychecks.
You have to check the particular paperwork for that plan, but there is generally a concept of vesting, the point at which you will have earned the portion of your money contributed by your employer.
If you were terminated (quitting, or firing, or whatever) prior to vesting, you generally lose the money.
This seems likely. A very common vesting term is 5 years, so it makes sense that it would be terminated now. Did you contribute any money, or was it all from your employer?
This is true but as you note, this applies only to employer contributions. The employee is always entitled to 100% of what they contributed. The statements should show employee contributions separately from employer contributions, and show what part of employer contributions are vested at any given time.
kwc27, you don’t know whether you made any contributions. It would be very unusual to have a 401(k) that provided employer contributions without employee contributions. Usually the employer contribution is a percentage of the employee contribution. (I work for one of the exceptions.) I suggest you review the statement more carefully to see if it breaks the balance out to show what portion is vested or unvested employer contributions. (For them to take contributions out of your paycheck you would have had to have filled out an enrollment form, specified how much they should take out, completed beneficiary forms, which I would think you would remember but five years later maybe not.)
BTW this is one reason to keep pay stubs around for a while, or at least some sort of annual summary.
If you leave the company, you lose the unvested portion immediately. The account does not sit there for the remainder of the vesting period and then suddenly show a zero vested balance. I have left three different employers with unvested amounts in the account.
If there is an employee contribution in the account, it will never be forfeited. You can leave it in the account as long as you want even though you are not employed there anymore.
I left my former company after twelve years and haven’t moved the 401k yet. While I was employed there, the 401k was free, but now Fidelity charges me $40 a year. With an $80 balance, I’d loose it all in fees in a year - so they say “move it or loose it” when you terminate.
(I’ll probably move it into my IRA at my bank, which is where I moved my last company’s 401k, and which doesn’t charge me a fee, in part to keep all my retirement funds together so I’m not retiring with “I wonder where my funds from company X ended up?” One of my early employers got bought out another went under, and I’d migrated my funds for both when I left, but finding them twenty years later had I not, might be a pain in the back end."
Mine still showed a vested value for a couple years after I was terminated. I don’t know if it would have ever changed, but I eventually rolled it over into an IRA.
One more thought, kwc27: If your statements are online, then you can probably look at older statements that might give you the information if it’s not available on the latest statement. Usually they go back at least three years online, maybe five.
