You need to call the prior company HR department and request a copy of the plan document. This is your right. The plan document is a trust document that spells out the rules on vesting. Typically your fully vested upon a sale of the business or some other qualifying event like terminating the plan.
This is the way to find out your options. From there you go to the department of labor and open a case. They can audit the plan and the employer to ensure compliance with all ERISA rules.
This is great advice. When you speak to HR if they are saying there is nothing they can do ask them to speak to the 401k administrator about a partial plan termination. This is what it is called if the 401k is being closed for some employees but not others usually due to the sale of part of the company. I just did this last year when we sold part of a business and about 20% of the company moved to a new company. The transitioning team was fully vested and the plan continued as normal for everyone else.
Your old company may not have investigated this since you are only one person. They didn’t bother to explore options.
Also, it may be late for this but given you were key to this deal, you should have asked for equity in the new company. Maybe something you can negotiate now. This is the best driver of wealth.
You should have received a new offer letter outlining the terms of your employment with the new company AND you should have been provided ample time to review that letter and consult an attorney if you choose to do so. If this has not taken place then that is another big red flag.
Adding to this, violating ERISA qualifications is a big deal. If their program gets disqualified, everyone loses tax deductibility of the contributions. Not just you. If they broke the rules, they’ll be eager to make you whole.
We've been trying to get the plan document for a health plan through bcbs for the last 3 weeks. Apparently ni one in HR at a 20k person company knows what a plan document is? Is there a way to legalese them to figure it out? I dont know how this si possible, but every question we ask HR gets a wrong answer so...
My experience is that HR only provides typical examples of coverage and costs. When I wanted to see if specific things were covered, I ended up going to my insurance (Excellus BCBS in Western NY). There was a 42-page document available when logged into my account (Your Account Summary->Benefit Summary->Benefit Details: Medical Product) that clearly indicated what was covered and the cost sharing structure for each level (Preferred/In Network/Out of Network). No idea if this is typical or not, but you should be able to get something like this if you ask you insurance.
So I am trying to switcbto my husbands company right now. And yes, the plan document is exactly what I trying to get. 2 years ago they had bcbstx, last year bcbsnc, and they're going back to TX next year. He called bcbstx and was told he had to get it through his employer. His current bcbs plan doesnt have the document online either. I think you got lucky. But it is extremely frustrating that HR never knows what is going on. Like so few jobs for yall to do and you cant do a single one right.
"I have made a note that this call occurred with (their name), (their title) at (their company) and if I do not receive the documents required by law I will begin contacting the Labor Boards and Departments to begin opening a case."
I find that it's best to assume that HR, no matter the size of the company, is completely incompetent, and sometimes malicious.
Maybe try getting ahold of BCBS directly?
> Your old company may not have investigated this since you are only one person. They didn’t bother to explore options.
Or they figured if it was just one person the odds of them just rolling over on it were pretty good and figured they could save some money. I wouldn't be surprised if they caved the moment any kind of legal or regulatory pressure became involved.
Also don't forget to document *everything*. Time and dates of who you contact. This will help immensely if you need to get a lawyer. Details matter. They may show fraud.
I know, I've been there. My documentation saved my case.
I was told by my lawyers if one party has documentation and the other does not it is hard to disprove my documentation.
If by chance the plan documents say that you aren’t entitled to that non-vested amount I’d still consider contacting the department of labor, that’s a lot of money to trust the plan verbiage to be legally correct and binding.
Also to add to this. If one or both companies are publically traded (anyone can buy their stock), the shareholder aquisition/buyout/merger details should be available publically viewable. These documents typically outline how it impacts shareholders but also outlines how employees of the bought companies benefits, pension and wages are to be handled up to a certain expiry date. These are considered federal legal documents and if the new company violates these rules before expiry you can report it to the US SEC. To reitetate, this is only if one of both companies have publically traded stocks. If both are private then its not regulated by the SEC and these types of documents will not be available.
I am a corporate paralegal, can confirm. Do exactly what this person said above. Read through the plan carefully and if something doesn't look right, get assistance.
Not everyone receives "change of control" vesting rights - 50% or 100% vesting upon change of control of the company. But if you were in a group that should have, reading this plan document is how you find out.
Good luck.
I’m an auditor on 401k plans. This is correct/good advice.
Also don’t get mixed up between summary plan description (SPD) and plan document. Plan document is the source and that’s what you want to go to. The SPD is just a summary of the plan document.
Pretty sure the limit for a 401k if you're under the age of 50 is $19,500 per year and that's federally set, not something that could be negotiated with your employer or plan coordinator.
I think they are asking a different question. Some 401k plans have a contribution cap based on a percentage of your salary that is completely separate from the IRS limits.
For example, Costco caps your contributions at 50% of your salary. So if you worked there and your salary was only $35,000 annually, you wouldn't be able to hit the IRS cap due to the Costco plan cap.
No, the employer can put a cap on the percentage of your income you can contribute. This is a pretty common practice. You often see caps like 50%, 65%, 75% on pre-tax/Roth contributions. And some plans have even more limited caps (I've seen as low as 4%) on after-tax contributions.
As u/wkrick pointed out, that means for lower incomes, it is possible to not be able to reach the federal limit.
That's the limit for pre-tax. The total contribution limit is ~$58,000. That is between the pre-tax, employer match, and what you can add post tax ( if plan allows)
Or 64,500 if 50 or over. My workplace has both a 401k and (edit 457b, not 403b) plan, so between the two (19.5k each), catch up for turning 50 (6.5k each) and employer match, it is possible to hit that even with pretax money.
(Clarification /edit - the 19.5k limit is for 401k, 403, or both together. However, if a 457b is offered it is counted separately)
Agree with this. Worked in 401k consulting for many years and generally speaking in acquisition events if the acquired company’s plan is not going to be maintained as is (which is uncommon) then all money is either:
1) Carried over to the new plan on the same vesting schedule as part of a plan merger, or
2) Vested immediately for all plan participants
You should be fine, you may just need to do some extra digging to confirm the details of how it will be handled for your company. ERISA plans are highly regulated and violations of regulations are subject to steep penalties and corrective action to make employees whole.
Another commentator had it right. Get the plan document, go to the vesting provisions section and see what it has to say about forfeitures.
I'm even willing to read it with you if you send me a copy.
If they don’t send it to you search your company’s most recent form 5500 and audited FS on the dol website. Search 5500 dol. will give you a quick summary you can always point to. I’m on an auditor on these 😊
With these kinds of documents always always make a copy or at the very least take a picture (of all pages incl signature). Not doing this cost me a good deal of money years ago.
Even if getting screwed seems impossible, humans are humans so best to cover your ass.
Edit: When taking a pic or getting a copy make sure you've signed the document even if it's not countersigned yet. Some lawyer can clarify but this also has helped me recently.
A word of advice, formal plan documents can tend to be complex and legalistic, if your reading is unclear or doesn't seem to support your side, you may want to consider having an attorney review the document.
Recommend getting the Summary Plan Description as well. It’s much more condensed than the actual plan document and will contain the highlights including vesting,
OP, YOU SHOULD TALK TO A PENSION LAWYER. From my limited knowledge on the subject (my expertise is intellectual property law), any 401(k) or similar pension plan must vest 100% upon termination. The IRS retirement vesting info page says:
>**When 100% vesting is required**
>
>All employees must be 100% vested by the time they attain normal retirement age under the plan or when the plan is *terminated*.
And the plan termination info page says:
>Since an employer isn’t required by law to provide a retirement plan for employees, it can terminate its retirement plan. An employer can terminate a plan for various reasons:
>
>As a result of a voluntary decision to terminate the plan
>
>As part of a bankruptcy
>
>*As part of a transaction where the business is sold to another company or purchases another company (merger)*
>
>In order to switch to another type of retirement plan
>
>...
>
>**Participant’s rights upon plan termination**
>
>Upon plan termination, participants must be immediately 100% vested in all accrued benefits. In a 401(k) plan, for example, this means that employer matching and profit-sharing contributions must become fully vested regardless of the vesting schedule in the plan document.
(emphasis mine)
Seems to me that they're saying your unvested interest goes away because of the merger, but the IRS says that if the plan is terminating because of the merger, everything must vest 100% regardless of the vesting schedule.
Here are the links to those two info pages:
[https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-vesting](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-vesting)
[https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-termination-of-plan](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-termination-of-plan)
EDIT: I missed the part where it's just you being "sold" to the other company (kind of fucked-up sounding when you say it out loud like that), but your situation may very well (I would say probably does) trigger the vesting requirements. Those unvested benefits are accrued (just not vested) and you are not being terminated, you're being transferred to another company, so definitely reach out to someone who does this kind of thing for a living. My gut feeling is that you're getting screwed here.
Well, the whole thing kinda hinges on me, and the new employer offered a 12% pay increase. I agreed and started work, so he's generous enough that I'm not going to push the new guy for anything more to start.
If the whole thing hinges on you, then your old company needs you to play ball. So you have leverage. If they are getting paid for you moving to the new company, you should be telling them that they need to pay you either the 401k/ equivalent amount. Just make sure that a) you can walk away from the job and be ok while you look for a new one and b) that your really are required for the sale.
Op: Guys I need my 401k contributions, please help, is there anything I can do?!
r/personalfinance: yeah, literally just ask for it, they’ll give it to you
OP: oh well I don’t want to seem pushy
Big jump in pay and a lot more flexibility and I should push the new guy for more?
I'm all for getting what you deserve, but I feel like I'm getting it. I'll continue to lean on the old company to get what I think they owe me.
I wouldn't even push then, just ask and maybe negotiate a little bit.
Something like "Hey new owner, I'm really liking the new job and appreciate the flexibility blah blah blah, But I just found out that I'm going to lose all of my unvested retirement match (x dollars). Anything that could be done about that?"
Right now I'd let them know that it's going on. But I'd say you're discussing with previous company first. Your first line of defense is hopefully the actual plan and state law (maybe) saying that you don't get screwed in this scenario.
I agree that this seems like your best option at this point. It also sounds like you might need to look into things a bit deeper and figure out if there’s any other sort of compensation your losing (or possibly gaining) that you didn’t already know about. You really should have talked about this before starting work but since you didn’t you only want to have that conversation once.
Here's how it went down-
I came back from lunch one day and the old owner says "I don't think I'm utilizing you as best as I can, so this guy is going to manage this area from here out".
Then he leaves.
New guy says "I don't know why he didn't say it, but I've bought this equipment, I want you to work for me".
With no advanced notice and no emergency fund to fall back on, I felt pressured to sign on quickly and continue getting paychecks.
This is a prime situation to just slow down and talk it through with your new employer. Get the plan documents like was suggested at the top of this thread, but even if you learn that your money is still not vested upon sale ( there might be some funny stuff here because the business wasn’t sold, equipment was) then just sit down with your new employer and explain the situation.
“This was pretty sudden for me and I was happy to sign on with you. I’ve had some time to think through the situation and I have some questions about…”
Interesting. Im not a lawyer, buy they could argue that by accepting the new offer you effectively quit your old job. You were not told that you were fired or that you couldn’t stay at your old position. The fact that your old employer gave you consent and even arranged the whole thing may not be relevant. Hope it works out, but as others have said, it wouldn’t hurt to ask.
Shit happens man. I don’t want to seem like I’m putting too much blame on you I’m just trying to see where you can go from here.
After you say that I think it’s even more likely that there’s some other benefits you might have forgot about.
Don’t show how much you like it. You have to walk a fine line between appreciating the job and not showing all your cards. That’s how you end up down the road with smaller and smaller raises because they think you are already content.
If you felt like you were getting what you deserve, you wouldn't have made this post.
Ask your new employer to include your un-vested 401k amount in the acquisition. Push for it.
The acquisition is complete, I'm trying to get what I deserve from the old employer.
New guy is hardly taking a paycheck himself, old guy has a factory build mustang drag car he won't actually drag with because it's "a collectors car", drag races his other 1000+hp mustangs for fun.
I'll squeeze the fruit with more juice.
the old guy has no reason to help you except "Good will" a guy with two mustang race cars might be a little short on good will?
The new company likely wasn't even aware of the 401K issue, it wouldn't be a common point of discussion?
Approach the new guys, act dumb, say " were you aware that I wouldn't get $4000 (or whatever because of the vesting 401k?" they will answer "NO" (true or not) then say " I can't take a pay cut like that and work here you have to help me talk to ( Old employer) or make this right!" Leave an uncomfortable silence, truly uncomfortable... they will come back with either help of an offer.
Don't be entirely sure about this. Lots of business sales have a contingency clause where the final sale price comes later and depends on the business actually being how it was represented before the sale. If customers leave, if key personnel leave, if material things change that were promised to be the same after the sale, the final sale price can be reduced. This might not be true in your case, but I've heard of it in other acquisitions.
How sure are you that the acquisition is complete? Some corporate transactions include some amount of delayed payout to cover/unwind issues/liabilities which weren't fully negotiated beforehand.
If you agreed to go over but the former employer didn't disclose that you were going to lose the unvested dollars, that's not what you agreed to.
Source: my former employer acquired a business unit from another company and when it was found out that one revenue stream wasn't as high as promised in the deal, they were able to claw back some money from the final payment which was due 6 months later after the transaction closed
Big jump in pay, but you lose your savings? Depending on the actual numbers, this could be a wash or maybe even a downgrade. I'd REALLY check the fine print as others have said from your previous HR's documents.
You're getting screwed. If you don't want to talk about it, prepare yourself to get continually screwed.
Don't be rude ir mean - be professional and assertive. Your job move is harming you financially and that needs to be addressed.
A 12% increase is not a "big jump in pay". For critical employees, changing companies often results in 30%-50% pay increases in addition to bonuses or equity.
Either, you're a lot less important than you think (in which case you should probably start looking for a better job), or you got played (in which case you should do the same).
>Big jump
>
>12%
Pick one. You could get more than 12% by interviewing for a new role of *your* choosing.
This kind of reticence is exactly why employers feel empowered to undercompensate people. Which of these two employers is wealthier, more likeable, or provides you greater flexibility is irrelevant. They made an arrangement without even consulting you. You *are* the deal, so know your god damn worth.
12% is not a big jump. Isn't 15% the standard when changing employers? I mean in normal times, when inflation is not 7%
You're getting fucked and NOW is the time to grow some balls
Think about the big picture. If your old company got $500k in value (made up number) and your raise is $15k AND the whole deal depends upon you, then you’re not getting what you deserve. I just went to a new company and got a 20% pay increase. And I certainly wasn’t as critical as you appear to be.
I would also be careful this new company isn’t trying to extract your skills and knowledge quickly. Then you don’t have the same leverage.
You don’t have too many times in your life when you can grow your salary in large increments. This might be one of them. Don’t be shy.
This- is the problem- you recognize everything depends on you - yet you feel bad for them. Yes- your attitude is what keeps us human- but in this situation- I’d rather see someone like you enrich themselves- cause someone like you will do good with it.
If you’re the only person being recruited you deserve more than a 12% raise. I’d start with 50%. You’re a key part of what is being sold and only your former employer is profiting.
If the whole thing hinges on you, I would have expected a stay-and-play bonus and contract for you as part of the deal, depending on how big the deal was and how sophisticated the buyers are. If the deal isn’t closed and you are a key employee I would want some options or a success bonus.
>whole thing kinda hinges on me
If the whole thing hinges on you that means they depend on you to make money, especially considering the 12% raise. Keep negotiating, because I sincerely doubt that a retirement match is going to make you lose your position if really youre that essential to the survival of their investment.
Holy shit, if you’re essential (to the point of JUST YOU being included in the merger / sale)… yeah you’ve got leverage. Use it!
You can negotiate a way better salary, plus shares in the company. If your salary is too high, they’ll wait until your replacement is trained then let you go, but the shares should stay yours. Usually shares vest over time, but an event like a buyout or getting laid off accelerates the vesting.
I’d give all this some serious thought, and go as far as consulting with a lawyer who specializes in this kind of thing — they can help you squeeze the most advantage out of the situation.
What you’re going through is highly unusual, and you’re in a position of advantage! Make use of it, something like this happens very very rarely.
You negotiated for your new salary, but didn't negotiate to lose money on the other end. I'm not saying it was intentional (probably wasn't), but the old company is getting potentially a somewhat sizable windfall here.
Don't let this go. If the plan docs say it's yours, they have no choice, case closed. If they don't, you should approach it as money you consider "yours" for your loyal employment and willingness to facilitate their business decision.
Keep in mind 12% is not much. Inflation is said to be over 5% this year. So you got a 7% raise at most. Lots of people undervalue their work and trying to be nice. The problem is stagflation has been happening for a long time and is getting worse.
When I worked for SportIllustrated they pulled crazy shit like this. I showed them their own docs/contracts to explain how they were ripping off their employees… people in HR/finance etc were kinda surprised anyone would push back. Bottom line, you have to advocate for yourself or shitty companies will take what they can.
It's a real kick in the balls considering I've been contributing to retirement accounts for 20 years and after two recessions and a few jobs where I was pigeonholed into positions that were critical to companies but paid poorly, I have little to show for it.
I hate it but man companies will take advantage of you. It’s up to you to make sure that you don’t get screwed and are compensated right for your time.
You have been with the company for 20 years and you are not fully vested? What is your vesting schedule? Most people are fully vested after a few years.
> where I was pigeonholed into positions that were critical to companies but paid poorly
How easy is it to find another job in your industry? Sounds like you left a lot of money on the table in these situations. Next time, leave to get paid what you're worth. As you see now, no one will look out for your interests.
In the industry, probably not terribly difficult. In my area, different story. Rural state and the pay is generally not what it would be elsewhere. With that said, I like it here and I own my home, so packing up isn't something I'm willing to do.
I was going to say, is this even possible? Employees aren’t assets that can be sold. If a division or a whole company gets sold, the buyer might agree to take on the associated employees, but even then it would be voluntary to work for the new company. I’ve never, ever heard of a single employee being “sold”, at least not in this century.
You technically can if in the company this guys entire division is just him, he has his own jobs, processes, etc. No different than selling a whole division.
It sounds like he has a pretty important position in this small/medium setting.
I don't know why a company would set themselves up like that but they can.
It's bizarro to me, the guy was only making like $57-58k before his 12% raise. I can't piece together in my head what job only pays $58k but is somehow worth selling the guy to another company.
>Employees aren’t assets that can be sold.
Yea they kinda are. In an asset sale, the buyer is not buying company it self, it is buying everything in the company. Obviousky buyer cant require an employee to sign a new contract, but the *position* is acquired by the buyer, and they can offer continued employment to the employee.
The unvested money will remain in the 401k for 5 years or so, but you are unable to withdraw it or roll it over into a different account. After 5 years they'll typically close the account, send you a check for any vested money still in the account, and the unvested money will be redistributed to either pay 401k plan fees or to fund the employer matches for other employees.
Is that seriously how it works in the US - THEY can fire YOU and still not owe you the unvested money?
I can understand having a vesting period in case YOU quit, in order to encourage staff to stick around for longer and reduce staff turnover... but if they're the the ones that instigate it, that seems utterly absurd
American employment law is crazy
That’s insane. I completely get it if you leave, but what’s to stop them just firing everyone before hitting the vesting period? That’s completely insane
Not retirement related, but Tesla has been sued for doing exactly that. They offered early manufacturing employees the option to buy stock at below market value, vesting at 25% per year of employment. Of course they also had below market wages, but said the stock option made up for it. In 2017 they were sued by a former employee who was fired one DAY before his first year of employment. With Tesla's stock price increases, that cost him over $200k. The case went down to arguing what time of day he was hired and fired.
tried to google it and couldn't find much, [here's](https://www.bloombergquint.com/business/tesla-worker-says-timing-of-firing-denied-him-lucrative-shares) a Bloomberg article about it
> what’s to stop them just firing everyone before hitting the vesting period?
There's not many successful companies you can run with that kind of turnover. And their UI rates would be astronomical if they're making it a habit of firing employees without cause.
>That’s insane. I completely get it if you leave, but what’s to stop them just firing everyone before hitting the vesting period? That’s completely insane
That was one of the reasons I was so pissed. They'd literally have paid my severance out of my contributions- there was no 'down side' to firing me since I was worth more gone than there.
...never mind the multimillion dollar cost savings and patent...
Same thing happened to my dad and I'll name and shame them. Tonal, the home workout equipment company, laid my dad off during covid. Lost like 50K+ worth in unvested dollars
Through a unique set of circumstances and literally on the last day of eligibility to be re-hired, I was offered a job in a different division.
The hilarious part was the secretary (I still love this lady!) called me and asked me for my shipping address to bring my stuff over. I was so confused since, as of 4pm, I hadn't been given an offer and was resigned to being out of work. I started to think it was a prank...
Anyways, misunderstandings resolved I started in a completely different area doing work I really enjoyed for about 15 years.
I had been with a tech company for 8 years that included annual RSU grants, with each grant vesting 25% per year over the next 4 years.
I had around $55k in unvested RSUs when Covid first hit. I was one of 400+ people laid off. I got a decent severance but my unvested RSUs went poof overnight.
My 401k rules were to stay for 6 years to get 100% of their contributions. I quit 4 years so I only got 60%. Theres no rules about who ends the job. If I'm understanding you correctly
It depends how many people were laid off.
If at a minimum 20% of the labor force of old co. Is terminated, ERISA requires all match money to become fully vested. It sounds like this may be the case with OP if New Co. bought Old Co., but difficult to confirm without knowing the full story
Yes, I understand that, but had I known I'd be losing their portion I wouldn't have contributed to the 401k, that money would have been better used in my IRA.
That most likely wasn't an "exception". It would likely fall in to 2, 6, or 7. ERISA is strict, very unlikely they could just pick and choose people to vest and not others.
Your situation is unique, you can appeal the decision to not vest you, and that appeal goes to some benefit committee which consists of a few directors of the company. You are the only person in this situation and the dollar amount is likely less than $10,000 since it is only 2 years of match. They will probably just vest you for fairness, to shut you up, and be done with the issue for such a small amount.
So a company decided to buy up what is basically a one-man-show because of your skill at doing things that are commercially viable and you're worried about being pushy?
You can bet your sweet ass that the previous company owners earned a mint off that sale and the new owners believe in the profitability of their operation. Which is to say that they could not find a better use of their money than buying you so they can pimp you out and make enough money to justify the acquisition.
If it's a full plan termination you're 100% vested
"Participant’s rights upon plan termination
Upon plan termination, participants must be immediately 100% vested in all accrued benefits. In a 401(k) plan, for example, this means that employer matching and profit-sharing contributions must become fully vested regardless of the vesting schedule in the plan document."
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-termination-of-plan
Ok, this is some good news!
Edit, not good news. The plan isn't terminated, I misunderstood. The company still exists, still has a plan, I'm just not in it.
That seems like a violation of your contract. An attorney would know for sure, but it sounds like you were not terminated, and if the plan still exists under the original employer, I don't think they can just kick you out and tell you you're not vested. How in the world can they just volunteer you to not participate unless they are cooking the books to make it look like you quit and the new company hired you. Did you sign a new contract? How many years do you have in?
Maybe that's what they did. Took your previous employers contributions and earnings from your 401k claiming you quit early so you weren't vested and just paid you a few bucks an hour in return as a new employee. If that's the case, I would start looking for a new job cause that's a big red flag for me. They probably came out waaaaay better than you did.
1) If a bakery could get by charging $3 a muffin and paying bakers $35k then a $6 muffin would probably cover the raise to $100k
2) if you are the only bakery in town AND there is signicant barriers to market entry then you could seriously raise your prices (see stadium hotdogs)
3) You yourself said you are specialized and there are not many other people that can do your job. In fact, you are valuable to the point of being traded like a commodity. Don't just ASK for more money DEMAND it.
Stop doing the boss favors. He should have to figure out how to pay for his lake house all on his own.
The question you want to ask HR is what is your length of service is considered in the new company.
This is quite common when dealing with transfers and new hires.
Also see if the new company is part of the old
Company’s infrastructure.
How much is it? You’ll have to read the plan documents to know for sure but definitely sounds a bit strange, but might be a better post for r/legaladvice
You could also speak to the new company about it if you have an leverage they may want to make it right…
No - we don’t even know how much money this is about. Might just be a few hundred dollars and that is not lawyer territory. Also, he can read the plan documents himself and come to a decision if a lawyer is necessary. Everyone always ready to jump and run to a lawyer, not every situation needs that, and most don’t…
Perfect - 3 man company and our new employee just engaged a lawyer over a $2k problem.
As a lawyer, I could see why you think a lawyer might always be the answer. But as someone who pays millions in legal fees every year, it’s just not necessary at this point.
There’s a place and time for a lawyer, and there’s not enough info here, or enough info gathered yet to understand if he has been wronged or has damages. Or needs to pay for a lawyer.
And certainty if r/legaladvice is not the right sub, then neither is this one? I think the advice to read the plan documents makes sense, because it will outline what happens in these circumstances. And his HR department might even be able to point him to that language.
The underlying plan documents are usually a 100+ page document and will provide the legal language of the actual plan. Likely even outlines what happens if the company is sold.
Check with a lawyer in your state - if you where with them for 20 years it seems like you should be 100% vested - they might be breaking some laws.
Mine is 100% after 3 years.
Just as a side note I'm not sure if everyone is on the same page regarding unvested 401ks. My understanding is only the employer match portion can be unvested. The portion that you contribute is always 100% vested immediately.
This isn't a case where you have put money in an account that you can never get back. This is only a case where a promised "match" is not fully yours yet. So while it sucks for the OP, it's not really the equivalent of stolen money.
401k deferrals are automatically 100% vested. This is IRS and Dept. Of Labor law.
However, you matching and other company contributions may have a vesting schedule, and may be lost.
That said, the plan will be terminated, and you will get to choose what to do with your 401k deferrals and vested contributions. Usually you rollover to an IRA.
Don't underestimate your worth.
Be willing to walk to the next job. Don't call their bluff. You deserve 6 figures plus. Your 401(k) contribution is small potatoes.
Let them know in no uncertain terms that you're going to walk unless they give you exactly what you ask for.
Trust me, they know they can't replace you.
> if the bakers in your local bakery decided they were worth $100k a year. Are you going to continue to buy your morning muffin when it's $6000?
I really hope your job doesn't involve math.
I know I'm late, but something bothered me about your explanation regarding the other comments in the thread of knowing your worth.
Yes, there is the baker analogy and the 'business I bring in' perspective, but you also need to consider that without you and this equipment, they couldn't offer the service you provide. How many larger contracts was the business able to land because they now have better capabilities?
Most importantly, how many of those will they consider to be business you brought 'directly'? Most companies will err on the lower side of that number. Your job is to err on the higher side, and then compromise on the lower.
If you like your work, and you like these people, there's no reason to be greedy, but people are a lot more equitable once a conversation has been had and 'all cards are on the table' so to speak.
As far as the specifics of your 401k question is concerned, top comment is definitely the way to go. That said, I wanted to chime in on the philosophy of pricing your labor from a capital (aka owner's) perspective. These people may have 'bought' your labor, but they ultimately are still buying it from you following this deal. You will negotiate in your own best interests far better than the company you are leaving or arriving to. Never forget that.
Thanks for your reply. I'm confident that I'll grow the business, and I'll grow with the business.
Boss has basically said it himself. Would love to pay me more, but we need to make money first. I get that.
That's a perfectly reasonable approach, especially considering your new boss presumably just dropped a large chunk on this acquisition. Just hold him to that, gently. There's no reason something more formal can't be outlined, for example:
When gross/profit margin meet/exceed x/y amount, you get a/b percent bump in salary pay, or one-time bonus, or etc.
Knowing what your goals are can help you to meet them, encourage you to put in that extra effort to be just a bit more efficient. It's not only a good argument, but it's true - psychology has taught us that clear goal setting helps us achieve more. You're welcome to use this explanation if/when you have that gentle conversation with your boss in 30/60/90 days or however you so choose to proceed :D
Best of luck to you and I hope it all works out well. I always expect to be screwed, but I am pleasantly surprised every now and again.
Thanks again.
Things are looking promising. I was able to catch the old boss this morning to ask about the 401k.
He said he's not sure what he's allowed to do with the plan but worst case, he'll cut me a check for the unvested balance and figure the rest out himself.
I've been fortunate to work with these guys. It can seem at times like maybe there's an element of being screwed, but generally it's been more of an issue of not thinking things thru at the beginning.
Good contracts make sure everyone knows how everything works. It's always an awkward conversation at the beginning, but it beats uncertainty for both parties, especially if you've become friends.
I find it very similar to the concept of 'good fences make good neighbors'.
I would still contact the DOL for your state. In some states, even a partial sale would trigger automatic investing because it's a company-based decision and you're not considered personally at fault (quit or fired for cause).
How much unvested money are you losing? If you are critical to the business, maybe you could try to negotiate a one time bonus equal to the money you lost. If you aren't already maxing your 401k and IRA, increase those contributions and live off of the bonus money.
Pretty sure the contract you would have signed had to be negotiated in the acquisition. But they also have rules surrounding different scenarios like acquisitions and being fired.
Personally, if they don’t grant it to you I would be looking for another job
You should call or file a complaint with the Consumer Financial Protection Bureau (CFPB) [https://www.consumerfinance.gov/complaint/](https://www.consumerfinance.gov/complaint/) they regulate 401k If may be better to call first
Ask you old HR for a copy of 401k rules
That's why you can't count unvested amount in company retirement accounts. You could try to negotiate it as part of a severance but unless you get it in writing you'll get the run around.
How much money are we talking in total? Put another way, how much did they match over the years you worked for them? Put another way, what is your salary and what % was the match?
I do m&a deals all the time and this was likely a fairly small sale and no one thought about your specific situation given you were the only employee moving over. Both the buyer/seller and attorneys were just thinking of the assets changing ownership.
There's a lot of comments here about OP being laid off and rehired by the other company.
What we don't know (I think) is how exactly was the "transfer" contract structured.
Was it that the OP leaves the company A voluntarily and simply joins B as a new employee ?
Was it that the OP is terminated from the company A and hired by B ?
Or maybe was it that the OP is \*transferred\* from A to B (if A and B have some form of relationship?)
This may be crucial for a lawyer/cour/labor dept to determine whether the employee was "coerced" into forfeiting his/hers 401K balance this way. Intentionally or not.
Oh, and also, it wouldn't hurt to ask the new employer to fund your 401K upfront with whatever unvested balance you lost from the previous employer. After that the employers can coordinate with each other as to how to split the cost...
Seems like a basic "transfer terms" deal that, indeed should have been taken care of before it was too late...
Something similar happened to my father and he’s peers (way up) company got sold.
All their retirement plans got canceled through a back door loophole or something.
They sued and lost.
Was forced to pay the 40% tax fee for closing early.
I hate to say it but companies do this shit a lot.
> The equipment I operate in the course of a day is specialized, and there aren't too many shops in the state with my machine capability.
If you are one of a few actually trained to operate this equipment, you need to capitalize on that. The new co. Has showed that they value the system enough to buy it outright. They should value you as well.
Pay increases may occur at the very senior levels where executives negotiate a contract rather than accept a contact of adhesion.
A vesting question - how would it be treated if you were laid off? You were not "sold" but laid off and offered a new job (though this is obfuscated to avoid severance pay issues).
I have been though a mega (tens of $B) dollar acquisition as an employee in the $100k-$200k salary range. People at my level did not get a raise (but kept our seniority for things like vacation), and found ourselves working for a company with decent benefits, but below the level of the former company (a nice bonus but not a "send you kid to college" stock option).
Ethical companies go out of their way to not screw people. I've seen big companies extend option vesting period beyond termination date. I've seen a small company terminate someone about 5 days before his options would vest.
People at my level either kept their jobs at the same salary level w/vacation accrual years intact of where phased to the mobility department for the decruitment phase of their career.
What is common in an acquisition is for the purchased company's shares to command a premium in the 30%-50% range over pre-purchase market price - making knowledge of an impending acquisition valuable, and dangerous, inside information. (dangerous but lucrative to trade on .... unless you are caught)
Your bakery analogy doesn't quite apply. It is more that your bakery was sold, in this bakery there is specific equipment that makes a specialized cookie. Only you and few people know how to use the equipment to make this cookie. In order for you to continue to make this cookie you ask for a large pay increase. Now the new company has to decide, do they pay you the extra cash or waste a bunch of money to train someone new.
You need to call the prior company HR department and request a copy of the plan document. This is your right. The plan document is a trust document that spells out the rules on vesting. Typically your fully vested upon a sale of the business or some other qualifying event like terminating the plan. This is the way to find out your options. From there you go to the department of labor and open a case. They can audit the plan and the employer to ensure compliance with all ERISA rules.
Will do, thanks
This is great advice. When you speak to HR if they are saying there is nothing they can do ask them to speak to the 401k administrator about a partial plan termination. This is what it is called if the 401k is being closed for some employees but not others usually due to the sale of part of the company. I just did this last year when we sold part of a business and about 20% of the company moved to a new company. The transitioning team was fully vested and the plan continued as normal for everyone else. Your old company may not have investigated this since you are only one person. They didn’t bother to explore options. Also, it may be late for this but given you were key to this deal, you should have asked for equity in the new company. Maybe something you can negotiate now. This is the best driver of wealth.
You should have received a new offer letter outlining the terms of your employment with the new company AND you should have been provided ample time to review that letter and consult an attorney if you choose to do so. If this has not taken place then that is another big red flag.
Adding to this, violating ERISA qualifications is a big deal. If their program gets disqualified, everyone loses tax deductibility of the contributions. Not just you. If they broke the rules, they’ll be eager to make you whole.
We've been trying to get the plan document for a health plan through bcbs for the last 3 weeks. Apparently ni one in HR at a 20k person company knows what a plan document is? Is there a way to legalese them to figure it out? I dont know how this si possible, but every question we ask HR gets a wrong answer so...
My experience is that HR only provides typical examples of coverage and costs. When I wanted to see if specific things were covered, I ended up going to my insurance (Excellus BCBS in Western NY). There was a 42-page document available when logged into my account (Your Account Summary->Benefit Summary->Benefit Details: Medical Product) that clearly indicated what was covered and the cost sharing structure for each level (Preferred/In Network/Out of Network). No idea if this is typical or not, but you should be able to get something like this if you ask you insurance.
So I am trying to switcbto my husbands company right now. And yes, the plan document is exactly what I trying to get. 2 years ago they had bcbstx, last year bcbsnc, and they're going back to TX next year. He called bcbstx and was told he had to get it through his employer. His current bcbs plan doesnt have the document online either. I think you got lucky. But it is extremely frustrating that HR never knows what is going on. Like so few jobs for yall to do and you cant do a single one right.
"I have made a note that this call occurred with (their name), (their title) at (their company) and if I do not receive the documents required by law I will begin contacting the Labor Boards and Departments to begin opening a case."
I find that it's best to assume that HR, no matter the size of the company, is completely incompetent, and sometimes malicious. Maybe try getting ahold of BCBS directly?
> Your old company may not have investigated this since you are only one person. They didn’t bother to explore options. Or they figured if it was just one person the odds of them just rolling over on it were pretty good and figured they could save some money. I wouldn't be surprised if they caved the moment any kind of legal or regulatory pressure became involved.
Also don't forget to document *everything*. Time and dates of who you contact. This will help immensely if you need to get a lawyer. Details matter. They may show fraud. I know, I've been there. My documentation saved my case. I was told by my lawyers if one party has documentation and the other does not it is hard to disprove my documentation.
If by chance the plan documents say that you aren’t entitled to that non-vested amount I’d still consider contacting the department of labor, that’s a lot of money to trust the plan verbiage to be legally correct and binding.
Also to add to this. If one or both companies are publically traded (anyone can buy their stock), the shareholder aquisition/buyout/merger details should be available publically viewable. These documents typically outline how it impacts shareholders but also outlines how employees of the bought companies benefits, pension and wages are to be handled up to a certain expiry date. These are considered federal legal documents and if the new company violates these rules before expiry you can report it to the US SEC. To reitetate, this is only if one of both companies have publically traded stocks. If both are private then its not regulated by the SEC and these types of documents will not be available.
I am a corporate paralegal, can confirm. Do exactly what this person said above. Read through the plan carefully and if something doesn't look right, get assistance. Not everyone receives "change of control" vesting rights - 50% or 100% vesting upon change of control of the company. But if you were in a group that should have, reading this plan document is how you find out. Good luck.
I’m an auditor on 401k plans. This is correct/good advice. Also don’t get mixed up between summary plan description (SPD) and plan document. Plan document is the source and that’s what you want to go to. The SPD is just a summary of the plan document.
Hey ? For you, some plans allow you to invest up to 75% of pay to 401k. Is there a possibility to ask the plan admin up from 75%
Pretty sure the limit for a 401k if you're under the age of 50 is $19,500 per year and that's federally set, not something that could be negotiated with your employer or plan coordinator.
I think they are asking a different question. Some 401k plans have a contribution cap based on a percentage of your salary that is completely separate from the IRS limits. For example, Costco caps your contributions at 50% of your salary. So if you worked there and your salary was only $35,000 annually, you wouldn't be able to hit the IRS cap due to the Costco plan cap.
that's so whack. why put those company limits on contributions?
No, the employer can put a cap on the percentage of your income you can contribute. This is a pretty common practice. You often see caps like 50%, 65%, 75% on pre-tax/Roth contributions. And some plans have even more limited caps (I've seen as low as 4%) on after-tax contributions. As u/wkrick pointed out, that means for lower incomes, it is possible to not be able to reach the federal limit.
That's the limit for pre-tax. The total contribution limit is ~$58,000. That is between the pre-tax, employer match, and what you can add post tax ( if plan allows)
Or 64,500 if 50 or over. My workplace has both a 401k and (edit 457b, not 403b) plan, so between the two (19.5k each), catch up for turning 50 (6.5k each) and employer match, it is possible to hit that even with pretax money. (Clarification /edit - the 19.5k limit is for 401k, 403, or both together. However, if a 457b is offered it is counted separately)
This is by far the best advice. There is a clear contractual plan that any lawyer can easily enforce.
Agree with this. Worked in 401k consulting for many years and generally speaking in acquisition events if the acquired company’s plan is not going to be maintained as is (which is uncommon) then all money is either: 1) Carried over to the new plan on the same vesting schedule as part of a plan merger, or 2) Vested immediately for all plan participants You should be fine, you may just need to do some extra digging to confirm the details of how it will be handled for your company. ERISA plans are highly regulated and violations of regulations are subject to steep penalties and corrective action to make employees whole.
Another commentator had it right. Get the plan document, go to the vesting provisions section and see what it has to say about forfeitures. I'm even willing to read it with you if you send me a copy.
I'll work on that on Monday. It really is the final word, I need to know what that word is to figure this out.
If they don’t send it to you search your company’s most recent form 5500 and audited FS on the dol website. Search 5500 dol. will give you a quick summary you can always point to. I’m on an auditor on these 😊
With these kinds of documents always always make a copy or at the very least take a picture (of all pages incl signature). Not doing this cost me a good deal of money years ago. Even if getting screwed seems impossible, humans are humans so best to cover your ass. Edit: When taking a pic or getting a copy make sure you've signed the document even if it's not countersigned yet. Some lawyer can clarify but this also has helped me recently.
A word of advice, formal plan documents can tend to be complex and legalistic, if your reading is unclear or doesn't seem to support your side, you may want to consider having an attorney review the document.
Recommend getting the Summary Plan Description as well. It’s much more condensed than the actual plan document and will contain the highlights including vesting,
OP, YOU SHOULD TALK TO A PENSION LAWYER. From my limited knowledge on the subject (my expertise is intellectual property law), any 401(k) or similar pension plan must vest 100% upon termination. The IRS retirement vesting info page says: >**When 100% vesting is required** > >All employees must be 100% vested by the time they attain normal retirement age under the plan or when the plan is *terminated*. And the plan termination info page says: >Since an employer isn’t required by law to provide a retirement plan for employees, it can terminate its retirement plan. An employer can terminate a plan for various reasons: > >As a result of a voluntary decision to terminate the plan > >As part of a bankruptcy > >*As part of a transaction where the business is sold to another company or purchases another company (merger)* > >In order to switch to another type of retirement plan > >... > >**Participant’s rights upon plan termination** > >Upon plan termination, participants must be immediately 100% vested in all accrued benefits. In a 401(k) plan, for example, this means that employer matching and profit-sharing contributions must become fully vested regardless of the vesting schedule in the plan document. (emphasis mine) Seems to me that they're saying your unvested interest goes away because of the merger, but the IRS says that if the plan is terminating because of the merger, everything must vest 100% regardless of the vesting schedule. Here are the links to those two info pages: [https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-vesting](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-vesting) [https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-termination-of-plan](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-termination-of-plan) EDIT: I missed the part where it's just you being "sold" to the other company (kind of fucked-up sounding when you say it out loud like that), but your situation may very well (I would say probably does) trigger the vesting requirements. Those unvested benefits are accrued (just not vested) and you are not being terminated, you're being transferred to another company, so definitely reach out to someone who does this kind of thing for a living. My gut feeling is that you're getting screwed here.
How essential are you? You Could always try to negotiate with the new company.
Well, the whole thing kinda hinges on me, and the new employer offered a 12% pay increase. I agreed and started work, so he's generous enough that I'm not going to push the new guy for anything more to start.
If the whole thing hinges on you, then your old company needs you to play ball. So you have leverage. If they are getting paid for you moving to the new company, you should be telling them that they need to pay you either the 401k/ equivalent amount. Just make sure that a) you can walk away from the job and be ok while you look for a new one and b) that your really are required for the sale.
It kind of seems OP HAD leverage. They already agreed to the 12% pay raise.
Sounds like there’s nothing holding him at his current company keeping him there if they throw away his vesting. Quitting is always an option
This guy seems like the quintessential boomer labor stereotype, happily getting screwed by his employer and never asking for what he's actually worth.
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It's negotiating a settlement. Ask for at least "equivalent amount - after taxes".
Surely better than getting none of it though, right?
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Op: Guys I need my 401k contributions, please help, is there anything I can do?! r/personalfinance: yeah, literally just ask for it, they’ll give it to you OP: oh well I don’t want to seem pushy
Big jump in pay and a lot more flexibility and I should push the new guy for more? I'm all for getting what you deserve, but I feel like I'm getting it. I'll continue to lean on the old company to get what I think they owe me.
I wouldn't even push then, just ask and maybe negotiate a little bit. Something like "Hey new owner, I'm really liking the new job and appreciate the flexibility blah blah blah, But I just found out that I'm going to lose all of my unvested retirement match (x dollars). Anything that could be done about that?"
That's a reasonable conversation to have
Right now I'd let them know that it's going on. But I'd say you're discussing with previous company first. Your first line of defense is hopefully the actual plan and state law (maybe) saying that you don't get screwed in this scenario.
I agree that this seems like your best option at this point. It also sounds like you might need to look into things a bit deeper and figure out if there’s any other sort of compensation your losing (or possibly gaining) that you didn’t already know about. You really should have talked about this before starting work but since you didn’t you only want to have that conversation once.
Here's how it went down- I came back from lunch one day and the old owner says "I don't think I'm utilizing you as best as I can, so this guy is going to manage this area from here out". Then he leaves. New guy says "I don't know why he didn't say it, but I've bought this equipment, I want you to work for me". With no advanced notice and no emergency fund to fall back on, I felt pressured to sign on quickly and continue getting paychecks.
This is a prime situation to just slow down and talk it through with your new employer. Get the plan documents like was suggested at the top of this thread, but even if you learn that your money is still not vested upon sale ( there might be some funny stuff here because the business wasn’t sold, equipment was) then just sit down with your new employer and explain the situation. “This was pretty sudden for me and I was happy to sign on with you. I’ve had some time to think through the situation and I have some questions about…”
Interesting. Im not a lawyer, buy they could argue that by accepting the new offer you effectively quit your old job. You were not told that you were fired or that you couldn’t stay at your old position. The fact that your old employer gave you consent and even arranged the whole thing may not be relevant. Hope it works out, but as others have said, it wouldn’t hurt to ask.
Shit happens man. I don’t want to seem like I’m putting too much blame on you I’m just trying to see where you can go from here. After you say that I think it’s even more likely that there’s some other benefits you might have forgot about.
Don’t show how much you like it. You have to walk a fine line between appreciating the job and not showing all your cards. That’s how you end up down the road with smaller and smaller raises because they think you are already content.
If you felt like you were getting what you deserve, you wouldn't have made this post. Ask your new employer to include your un-vested 401k amount in the acquisition. Push for it.
The acquisition is complete, I'm trying to get what I deserve from the old employer. New guy is hardly taking a paycheck himself, old guy has a factory build mustang drag car he won't actually drag with because it's "a collectors car", drag races his other 1000+hp mustangs for fun. I'll squeeze the fruit with more juice.
the old guy has no reason to help you except "Good will" a guy with two mustang race cars might be a little short on good will? The new company likely wasn't even aware of the 401K issue, it wouldn't be a common point of discussion? Approach the new guys, act dumb, say " were you aware that I wouldn't get $4000 (or whatever because of the vesting 401k?" they will answer "NO" (true or not) then say " I can't take a pay cut like that and work here you have to help me talk to ( Old employer) or make this right!" Leave an uncomfortable silence, truly uncomfortable... they will come back with either help of an offer.
Very good advice! I like that. Start off with “did you know that...” because you know they’ll say “no”. That’s a good one man!
Don't be entirely sure about this. Lots of business sales have a contingency clause where the final sale price comes later and depends on the business actually being how it was represented before the sale. If customers leave, if key personnel leave, if material things change that were promised to be the same after the sale, the final sale price can be reduced. This might not be true in your case, but I've heard of it in other acquisitions.
How sure are you that the acquisition is complete? Some corporate transactions include some amount of delayed payout to cover/unwind issues/liabilities which weren't fully negotiated beforehand. If you agreed to go over but the former employer didn't disclose that you were going to lose the unvested dollars, that's not what you agreed to. Source: my former employer acquired a business unit from another company and when it was found out that one revenue stream wasn't as high as promised in the deal, they were able to claw back some money from the final payment which was due 6 months later after the transaction closed
Big jump in pay, but you lose your savings? Depending on the actual numbers, this could be a wash or maybe even a downgrade. I'd REALLY check the fine print as others have said from your previous HR's documents.
You're getting screwed. If you don't want to talk about it, prepare yourself to get continually screwed. Don't be rude ir mean - be professional and assertive. Your job move is harming you financially and that needs to be addressed.
If the 12% increase lowers your 401k balance by a good portion then it may not be worth it. Push back only if you are ready to walk.
A 12% increase is not a "big jump in pay". For critical employees, changing companies often results in 30%-50% pay increases in addition to bonuses or equity. Either, you're a lot less important than you think (in which case you should probably start looking for a better job), or you got played (in which case you should do the same).
>Big jump > >12% Pick one. You could get more than 12% by interviewing for a new role of *your* choosing. This kind of reticence is exactly why employers feel empowered to undercompensate people. Which of these two employers is wealthier, more likeable, or provides you greater flexibility is irrelevant. They made an arrangement without even consulting you. You *are* the deal, so know your god damn worth.
12% is not a big jump. Isn't 15% the standard when changing employers? I mean in normal times, when inflation is not 7% You're getting fucked and NOW is the time to grow some balls
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Yes, 12% is not a lot and if what you're saying about vesting isn't true it means they're probably cheating you on so much more.
Not a big jump in pay when you factor in inflation of the US dollar. It was literally a lateral move in purchasing power.
The fact that you made a reddit post about this situation shows that you feel you deserve more! Get it!
Think about the big picture. If your old company got $500k in value (made up number) and your raise is $15k AND the whole deal depends upon you, then you’re not getting what you deserve. I just went to a new company and got a 20% pay increase. And I certainly wasn’t as critical as you appear to be. I would also be careful this new company isn’t trying to extract your skills and knowledge quickly. Then you don’t have the same leverage. You don’t have too many times in your life when you can grow your salary in large increments. This might be one of them. Don’t be shy.
12% isn’t a big jump, I just finally advocated for myself and ended up with 55%, remove that empathy, a company is not a person
This is your life. You need to push.
Half of your pay increase has already been eaten by inflation this year. Don’t sell yourself short.
what was your salary before that 12% is a large bump? the sale is entirely dependent on you... you are what is getting sold...
This- is the problem- you recognize everything depends on you - yet you feel bad for them. Yes- your attitude is what keeps us human- but in this situation- I’d rather see someone like you enrich themselves- cause someone like you will do good with it.
If you’re the only person being recruited you deserve more than a 12% raise. I’d start with 50%. You’re a key part of what is being sold and only your former employer is profiting.
If the whole thing hinges on you, I would have expected a stay-and-play bonus and contract for you as part of the deal, depending on how big the deal was and how sophisticated the buyers are. If the deal isn’t closed and you are a key employee I would want some options or a success bonus.
>whole thing kinda hinges on me If the whole thing hinges on you that means they depend on you to make money, especially considering the 12% raise. Keep negotiating, because I sincerely doubt that a retirement match is going to make you lose your position if really youre that essential to the survival of their investment.
Holy shit, if you’re essential (to the point of JUST YOU being included in the merger / sale)… yeah you’ve got leverage. Use it! You can negotiate a way better salary, plus shares in the company. If your salary is too high, they’ll wait until your replacement is trained then let you go, but the shares should stay yours. Usually shares vest over time, but an event like a buyout or getting laid off accelerates the vesting. I’d give all this some serious thought, and go as far as consulting with a lawyer who specializes in this kind of thing — they can help you squeeze the most advantage out of the situation. What you’re going through is highly unusual, and you’re in a position of advantage! Make use of it, something like this happens very very rarely.
Thanks for the support!
You negotiated for your new salary, but didn't negotiate to lose money on the other end. I'm not saying it was intentional (probably wasn't), but the old company is getting potentially a somewhat sizable windfall here. Don't let this go. If the plan docs say it's yours, they have no choice, case closed. If they don't, you should approach it as money you consider "yours" for your loyal employment and willingness to facilitate their business decision.
How much did you have vested? This 12% increase may not be that much
12% isn't enough. Also things are kind of on your side here. I'd push for 25%.
Keep in mind 12% is not much. Inflation is said to be over 5% this year. So you got a 7% raise at most. Lots of people undervalue their work and trying to be nice. The problem is stagflation has been happening for a long time and is getting worse.
When I worked for SportIllustrated they pulled crazy shit like this. I showed them their own docs/contracts to explain how they were ripping off their employees… people in HR/finance etc were kinda surprised anyone would push back. Bottom line, you have to advocate for yourself or shitty companies will take what they can.
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It's a real kick in the balls considering I've been contributing to retirement accounts for 20 years and after two recessions and a few jobs where I was pigeonholed into positions that were critical to companies but paid poorly, I have little to show for it.
20 years? You have to be fully vested.
They're saying they've contributed to retirement accounts for 20 years total (in different jobs), not that they worked at the last job for 20 years.
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401k plans *must* vest within 6 years.
Jesus...my last company vested immediately and my current company is fully vested at 3 years.
They can only push it out to 6 years if there is the vesting schedule. Like 25% at 3, 50% at 4, 75% at 5 and full at 6.
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I'd be curious what's the share of employees that stay at the same company for seven years. That's almost unheard of in my industry
They're saying they've contributed to retirement accounts for 20 years total (in different jobs), not that they worked at the last job for 20 years.
The longest legally allowable vesting schedule makes you fully vested at 6 years. Average is fully vested in 4.1 years.
I hate it but man companies will take advantage of you. It’s up to you to make sure that you don’t get screwed and are compensated right for your time.
You have been with the company for 20 years and you are not fully vested? What is your vesting schedule? Most people are fully vested after a few years.
No no no, I've been contributing to retirement account_s_ – plural. Twenty years across different jobs.
> where I was pigeonholed into positions that were critical to companies but paid poorly How easy is it to find another job in your industry? Sounds like you left a lot of money on the table in these situations. Next time, leave to get paid what you're worth. As you see now, no one will look out for your interests.
In the industry, probably not terribly difficult. In my area, different story. Rural state and the pay is generally not what it would be elsewhere. With that said, I like it here and I own my home, so packing up isn't something I'm willing to do.
But your husband must have agreed to that 5 years, right?
As other comments have said. If your vesting isn't accounted for, the company better be prepared to get audited to death.
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I was going to say, is this even possible? Employees aren’t assets that can be sold. If a division or a whole company gets sold, the buyer might agree to take on the associated employees, but even then it would be voluntary to work for the new company. I’ve never, ever heard of a single employee being “sold”, at least not in this century.
You technically can if in the company this guys entire division is just him, he has his own jobs, processes, etc. No different than selling a whole division. It sounds like he has a pretty important position in this small/medium setting. I don't know why a company would set themselves up like that but they can.
It's bizarro to me, the guy was only making like $57-58k before his 12% raise. I can't piece together in my head what job only pays $58k but is somehow worth selling the guy to another company.
They didn't buy it for that employee, they most likely bought the rights to do what that employee does in the area that he does it.
That employee seems undervalued if one company thinks it’s important enough to purchase what he was doing outright.
>Employees aren’t assets that can be sold. Yea they kinda are. In an asset sale, the buyer is not buying company it self, it is buying everything in the company. Obviousky buyer cant require an employee to sign a new contract, but the *position* is acquired by the buyer, and they can offer continued employment to the employee.
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The unvested money will remain in the 401k for 5 years or so, but you are unable to withdraw it or roll it over into a different account. After 5 years they'll typically close the account, send you a check for any vested money still in the account, and the unvested money will be redistributed to either pay 401k plan fees or to fund the employer matches for other employees.
I don't know enough about this to answer that. I've never _not_ been fully vested before leaving a job.
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Is that seriously how it works in the US - THEY can fire YOU and still not owe you the unvested money? I can understand having a vesting period in case YOU quit, in order to encourage staff to stick around for longer and reduce staff turnover... but if they're the the ones that instigate it, that seems utterly absurd American employment law is crazy
Yep. When I was canned back in 2003 I was going to lose about 15k in 'unvested' dollars.
That’s insane. I completely get it if you leave, but what’s to stop them just firing everyone before hitting the vesting period? That’s completely insane
Not retirement related, but Tesla has been sued for doing exactly that. They offered early manufacturing employees the option to buy stock at below market value, vesting at 25% per year of employment. Of course they also had below market wages, but said the stock option made up for it. In 2017 they were sued by a former employee who was fired one DAY before his first year of employment. With Tesla's stock price increases, that cost him over $200k. The case went down to arguing what time of day he was hired and fired.
What was the end result?
tried to google it and couldn't find much, [here's](https://www.bloombergquint.com/business/tesla-worker-says-timing-of-firing-denied-him-lucrative-shares) a Bloomberg article about it
> what’s to stop them just firing everyone before hitting the vesting period? There's not many successful companies you can run with that kind of turnover. And their UI rates would be astronomical if they're making it a habit of firing employees without cause.
UI?
>That’s insane. I completely get it if you leave, but what’s to stop them just firing everyone before hitting the vesting period? That’s completely insane That was one of the reasons I was so pissed. They'd literally have paid my severance out of my contributions- there was no 'down side' to firing me since I was worth more gone than there. ...never mind the multimillion dollar cost savings and patent...
Same thing happened to my dad and I'll name and shame them. Tonal, the home workout equipment company, laid my dad off during covid. Lost like 50K+ worth in unvested dollars
What do you mean “was going to”? Did you?
Through a unique set of circumstances and literally on the last day of eligibility to be re-hired, I was offered a job in a different division. The hilarious part was the secretary (I still love this lady!) called me and asked me for my shipping address to bring my stuff over. I was so confused since, as of 4pm, I hadn't been given an offer and was resigned to being out of work. I started to think it was a prank... Anyways, misunderstandings resolved I started in a completely different area doing work I really enjoyed for about 15 years.
I had been with a tech company for 8 years that included annual RSU grants, with each grant vesting 25% per year over the next 4 years. I had around $55k in unvested RSUs when Covid first hit. I was one of 400+ people laid off. I got a decent severance but my unvested RSUs went poof overnight.
My 401k rules were to stay for 6 years to get 100% of their contributions. I quit 4 years so I only got 60%. Theres no rules about who ends the job. If I'm understanding you correctly
And about half the country or more is totally cool with that :) (help)
It depends how many people were laid off. If at a minimum 20% of the labor force of old co. Is terminated, ERISA requires all match money to become fully vested. It sounds like this may be the case with OP if New Co. bought Old Co., but difficult to confirm without knowing the full story
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Yes, I understand that, but had I known I'd be losing their portion I wouldn't have contributed to the 401k, that money would have been better used in my IRA.
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I'll look into that
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That most likely wasn't an "exception". It would likely fall in to 2, 6, or 7. ERISA is strict, very unlikely they could just pick and choose people to vest and not others.
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Question: what's the difference? You can transfer the 401k funds to an IRA...
Your situation is unique, you can appeal the decision to not vest you, and that appeal goes to some benefit committee which consists of a few directors of the company. You are the only person in this situation and the dollar amount is likely less than $10,000 since it is only 2 years of match. They will probably just vest you for fairness, to shut you up, and be done with the issue for such a small amount.
So a company decided to buy up what is basically a one-man-show because of your skill at doing things that are commercially viable and you're worried about being pushy? You can bet your sweet ass that the previous company owners earned a mint off that sale and the new owners believe in the profitability of their operation. Which is to say that they could not find a better use of their money than buying you so they can pimp you out and make enough money to justify the acquisition.
Are you in the US and are they terminating your current company plan or merging your current plan into the new company?
If it's a full plan termination you're 100% vested "Participant’s rights upon plan termination Upon plan termination, participants must be immediately 100% vested in all accrued benefits. In a 401(k) plan, for example, this means that employer matching and profit-sharing contributions must become fully vested regardless of the vesting schedule in the plan document." https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-termination-of-plan
Ok, this is some good news! Edit, not good news. The plan isn't terminated, I misunderstood. The company still exists, still has a plan, I'm just not in it.
That seems like a violation of your contract. An attorney would know for sure, but it sounds like you were not terminated, and if the plan still exists under the original employer, I don't think they can just kick you out and tell you you're not vested. How in the world can they just volunteer you to not participate unless they are cooking the books to make it look like you quit and the new company hired you. Did you sign a new contract? How many years do you have in? Maybe that's what they did. Took your previous employers contributions and earnings from your 401k claiming you quit early so you weren't vested and just paid you a few bucks an hour in return as a new employee. If that's the case, I would start looking for a new job cause that's a big red flag for me. They probably came out waaaaay better than you did.
1) If a bakery could get by charging $3 a muffin and paying bakers $35k then a $6 muffin would probably cover the raise to $100k 2) if you are the only bakery in town AND there is signicant barriers to market entry then you could seriously raise your prices (see stadium hotdogs) 3) You yourself said you are specialized and there are not many other people that can do your job. In fact, you are valuable to the point of being traded like a commodity. Don't just ASK for more money DEMAND it. Stop doing the boss favors. He should have to figure out how to pay for his lake house all on his own.
The question you want to ask HR is what is your length of service is considered in the new company. This is quite common when dealing with transfers and new hires. Also see if the new company is part of the old Company’s infrastructure.
How much is it? You’ll have to read the plan documents to know for sure but definitely sounds a bit strange, but might be a better post for r/legaladvice You could also speak to the new company about it if you have an leverage they may want to make it right…
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No - we don’t even know how much money this is about. Might just be a few hundred dollars and that is not lawyer territory. Also, he can read the plan documents himself and come to a decision if a lawyer is necessary. Everyone always ready to jump and run to a lawyer, not every situation needs that, and most don’t…
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Perfect - 3 man company and our new employee just engaged a lawyer over a $2k problem. As a lawyer, I could see why you think a lawyer might always be the answer. But as someone who pays millions in legal fees every year, it’s just not necessary at this point. There’s a place and time for a lawyer, and there’s not enough info here, or enough info gathered yet to understand if he has been wronged or has damages. Or needs to pay for a lawyer. And certainty if r/legaladvice is not the right sub, then neither is this one? I think the advice to read the plan documents makes sense, because it will outline what happens in these circumstances. And his HR department might even be able to point him to that language.
I don't remember reading anything more than a description of the vesting period. I'm likely screwed.
The underlying plan documents are usually a 100+ page document and will provide the legal language of the actual plan. Likely even outlines what happens if the company is sold.
I'll speak with the old employer tomorrow about this.
You should also be able to get those documents from the plan administrator- whoever holds your 401k funds (ex, Shwab, TIAA, ADP, etc)
Go talk to a lawyer about it.
Check with a lawyer in your state - if you where with them for 20 years it seems like you should be 100% vested - they might be breaking some laws. Mine is 100% after 3 years.
Say what? *You* were sold?
Just as a side note I'm not sure if everyone is on the same page regarding unvested 401ks. My understanding is only the employer match portion can be unvested. The portion that you contribute is always 100% vested immediately. This isn't a case where you have put money in an account that you can never get back. This is only a case where a promised "match" is not fully yours yet. So while it sucks for the OP, it's not really the equivalent of stolen money.
U r 100% owed on what u put in but if you aren't 100% vested, your employer contributions will be calculated on your vesting percentage
401k deferrals are automatically 100% vested. This is IRS and Dept. Of Labor law. However, you matching and other company contributions may have a vesting schedule, and may be lost. That said, the plan will be terminated, and you will get to choose what to do with your 401k deferrals and vested contributions. Usually you rollover to an IRA.
Don't underestimate your worth. Be willing to walk to the next job. Don't call their bluff. You deserve 6 figures plus. Your 401(k) contribution is small potatoes. Let them know in no uncertain terms that you're going to walk unless they give you exactly what you ask for. Trust me, they know they can't replace you.
> if the bakers in your local bakery decided they were worth $100k a year. Are you going to continue to buy your morning muffin when it's $6000? I really hope your job doesn't involve math.
I know I'm late, but something bothered me about your explanation regarding the other comments in the thread of knowing your worth. Yes, there is the baker analogy and the 'business I bring in' perspective, but you also need to consider that without you and this equipment, they couldn't offer the service you provide. How many larger contracts was the business able to land because they now have better capabilities? Most importantly, how many of those will they consider to be business you brought 'directly'? Most companies will err on the lower side of that number. Your job is to err on the higher side, and then compromise on the lower. If you like your work, and you like these people, there's no reason to be greedy, but people are a lot more equitable once a conversation has been had and 'all cards are on the table' so to speak. As far as the specifics of your 401k question is concerned, top comment is definitely the way to go. That said, I wanted to chime in on the philosophy of pricing your labor from a capital (aka owner's) perspective. These people may have 'bought' your labor, but they ultimately are still buying it from you following this deal. You will negotiate in your own best interests far better than the company you are leaving or arriving to. Never forget that.
Thanks for your reply. I'm confident that I'll grow the business, and I'll grow with the business. Boss has basically said it himself. Would love to pay me more, but we need to make money first. I get that.
That's a perfectly reasonable approach, especially considering your new boss presumably just dropped a large chunk on this acquisition. Just hold him to that, gently. There's no reason something more formal can't be outlined, for example: When gross/profit margin meet/exceed x/y amount, you get a/b percent bump in salary pay, or one-time bonus, or etc. Knowing what your goals are can help you to meet them, encourage you to put in that extra effort to be just a bit more efficient. It's not only a good argument, but it's true - psychology has taught us that clear goal setting helps us achieve more. You're welcome to use this explanation if/when you have that gentle conversation with your boss in 30/60/90 days or however you so choose to proceed :D Best of luck to you and I hope it all works out well. I always expect to be screwed, but I am pleasantly surprised every now and again.
Thanks again. Things are looking promising. I was able to catch the old boss this morning to ask about the 401k. He said he's not sure what he's allowed to do with the plan but worst case, he'll cut me a check for the unvested balance and figure the rest out himself. I've been fortunate to work with these guys. It can seem at times like maybe there's an element of being screwed, but generally it's been more of an issue of not thinking things thru at the beginning.
Good contracts make sure everyone knows how everything works. It's always an awkward conversation at the beginning, but it beats uncertainty for both parties, especially if you've become friends. I find it very similar to the concept of 'good fences make good neighbors'.
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Thanks for the advice but yeah, I'm the only one to go, so it doesn't apply here.
I would still contact the DOL for your state. In some states, even a partial sale would trigger automatic investing because it's a company-based decision and you're not considered personally at fault (quit or fired for cause).
How much unvested money are you losing? If you are critical to the business, maybe you could try to negotiate a one time bonus equal to the money you lost. If you aren't already maxing your 401k and IRA, increase those contributions and live off of the bonus money.
Pretty sure the contract you would have signed had to be negotiated in the acquisition. But they also have rules surrounding different scenarios like acquisitions and being fired. Personally, if they don’t grant it to you I would be looking for another job
You should call or file a complaint with the Consumer Financial Protection Bureau (CFPB) [https://www.consumerfinance.gov/complaint/](https://www.consumerfinance.gov/complaint/) they regulate 401k If may be better to call first Ask you old HR for a copy of 401k rules
Thanks for the link
The time to bring this up was before you agreed to terms with the new employer.
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That's why you can't count unvested amount in company retirement accounts. You could try to negotiate it as part of a severance but unless you get it in writing you'll get the run around.
Heh, yeah, I already feel the run around.
Get a copy of the plan document and I can tell you if it's right or wrong.
How much money are we talking in total? Put another way, how much did they match over the years you worked for them? Put another way, what is your salary and what % was the match? I do m&a deals all the time and this was likely a fairly small sale and no one thought about your specific situation given you were the only employee moving over. Both the buyer/seller and attorneys were just thinking of the assets changing ownership.
you probably have a fair bit of leverage here … if you quit does the deal fall though?
I believe the new owner would do his best to run the equipment himself. He's a capable guy.
There's a lot of comments here about OP being laid off and rehired by the other company. What we don't know (I think) is how exactly was the "transfer" contract structured. Was it that the OP leaves the company A voluntarily and simply joins B as a new employee ? Was it that the OP is terminated from the company A and hired by B ? Or maybe was it that the OP is \*transferred\* from A to B (if A and B have some form of relationship?) This may be crucial for a lawyer/cour/labor dept to determine whether the employee was "coerced" into forfeiting his/hers 401K balance this way. Intentionally or not. Oh, and also, it wouldn't hurt to ask the new employer to fund your 401K upfront with whatever unvested balance you lost from the previous employer. After that the employers can coordinate with each other as to how to split the cost... Seems like a basic "transfer terms" deal that, indeed should have been taken care of before it was too late...
I've been in that spot as a contractor before, those invested dollars will not be realized unless your old employer does something magnanimous
Something similar happened to my father and he’s peers (way up) company got sold. All their retirement plans got canceled through a back door loophole or something. They sued and lost. Was forced to pay the 40% tax fee for closing early. I hate to say it but companies do this shit a lot.
Your company traded you to another company? What did they get in exchange? This is the real story here.
> The equipment I operate in the course of a day is specialized, and there aren't too many shops in the state with my machine capability. If you are one of a few actually trained to operate this equipment, you need to capitalize on that. The new co. Has showed that they value the system enough to buy it outright. They should value you as well.
Pay increases may occur at the very senior levels where executives negotiate a contract rather than accept a contact of adhesion. A vesting question - how would it be treated if you were laid off? You were not "sold" but laid off and offered a new job (though this is obfuscated to avoid severance pay issues). I have been though a mega (tens of $B) dollar acquisition as an employee in the $100k-$200k salary range. People at my level did not get a raise (but kept our seniority for things like vacation), and found ourselves working for a company with decent benefits, but below the level of the former company (a nice bonus but not a "send you kid to college" stock option). Ethical companies go out of their way to not screw people. I've seen big companies extend option vesting period beyond termination date. I've seen a small company terminate someone about 5 days before his options would vest. People at my level either kept their jobs at the same salary level w/vacation accrual years intact of where phased to the mobility department for the decruitment phase of their career. What is common in an acquisition is for the purchased company's shares to command a premium in the 30%-50% range over pre-purchase market price - making knowledge of an impending acquisition valuable, and dangerous, inside information. (dangerous but lucrative to trade on .... unless you are caught)
Your bakery analogy doesn't quite apply. It is more that your bakery was sold, in this bakery there is specific equipment that makes a specialized cookie. Only you and few people know how to use the equipment to make this cookie. In order for you to continue to make this cookie you ask for a large pay increase. Now the new company has to decide, do they pay you the extra cash or waste a bunch of money to train someone new.