As I noted previously, I was laid off last week from my job at one of the Big 4 accounting firms. While I won’t name it, it is a four letter name that I now regard as a four letter word. As I am dealing with the challenges of an accelerated job search, transitioning out of my old position, and saying goodbye to old colleagues, the firm is throwing another challenge my way. I have learned that I will be losing about $3500 in company matches to my 401k plan.
How is this possible? Well, the firm’s 401k plan has a five year vesting schedule for company matches. While the match percentage is not very good, you are not vested in any of the match until 2 years of service (20%), which then graduates to 40% at 3 years, 60% at 4 years, and finally 100% at 5 years. Although many companies have graduated vesting to help encourage employees to stay, most have the decency to provide for an accelerated vesting in cases where the termination of employment is not the fault of the employee (i.e., a layoff).
Unfortunately the firm is not one of those firms that provides accelerated vesting for laid off employees. In my case, although I am less than 1 year from being fully vested, the firm refuses to credit the $3,500 in company matches that will not be vested. Sadly for employees the firm’s supposed mission to be an “Employer of Choice” is nothing more than lip service. “We respect the individual”, “We are open and honest in our communication”, and “we act with integrity” are apparently all BS!
It is amazing the lack of foresight the firm has, being in a business where growth is highly dependent on maintaining good relations with alumni. I certainly know at this point that I will never give any business to my old firm.
So I guess the lesson for everyone else in this rant is to not consider that company match in your 401k to be yours until you are fully vested. Although you may strive to be loyal to your employer, if and when your employer chooses to kick you to the curb it is very likely they will keep part of your retirement savings as well.
First I have to say thank you for all the comments and advice I’ve picked up since the beginning of the year since I found your site. I wish you the best and know you’ll land at a better place.
As to the 401K – Companies think the final dollar when they consider letting people go. Back 15 years for myself, 6 months short of vesting as you have to be there the entire 5 years- good bye. The kick in pants was when they sent the letter saying no vestment. The worst thing – They calculated the time based on my official allowed entry into the 401K not the ‘due to great work, we will let you start early’. But finding a job took priority and didn’t fight this fight proving otherwise because of another surprise they can throw you as below.
But hopefully you do KEEP in contact with the friends and coworkers there because hopefully you don’t get this kick I got on top of the layoff AND 401k loss – You get a less than positive reference behind your back.
When you start seeing it close right after contacts with your references or former managers, don’t just suspect – act. Call up your contacts and get a feel of what’s going on. In my event, I got the story of what was happening as spoke to a VP – nicely of course. Yes I could have sued but I asked for a meeting due to the negative commentary politely. It was all fixed in one call – they know I was good and will fix the source. Shortly after, I completed my job search.
Lesson learned. Best of luck to you.
And Thanks again.
Thanks for the great comments, Bob! I’m glad you’ve been able to find some enjoyment and use from my sometimes random babblings. =)
You are completely right that the job search is priority #1 at this point, and it is good to make sure you aren’t getting negative references from former colleagues. Hopefully I won’t have the issue, but I think the tactic of tackling the issue directly through discussion was probably better than litigation. Ultimately you need the issue fixed so you can get a new job ASAP, and with lawsuits nothing ever happens ASAP. Thanks!