Author Topic: Employer Vesting Schedule Change Woes  (Read 1815 times)

Beardy

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Employer Vesting Schedule Change Woes
« on: February 19, 2019, 08:12:44 AM »
Didn't really think this was Investor Alley worthy but just wanted to share this bit of crazy at work right now...

TL;DR - New vesting schedule wipes out existing incremental vesting until 3 years tenure at company.

Company just entered a "Joint Venture" which is obviously code for "We got bought". 401k and insurance plans all changing, but the screaming elephant in the room to me is the new Vesting Schedule. I've been at this company for about 1.5 years, currently 33% vested on a schedule for an additional 33% per year. The new vesting schedule shows 0% vested until 3 years at the company, which immediately vests to 100%.

Currently, I'm sitting at a balance of about $715 vested, which means if I were to leave/get let go today I'd lose just over 5.5k pre-tax after 30 years (currently 30 years old so rounded that for minimum age without penalties at 7% return and ~3% inflation if my math is right). I also don't plan on dipping into it immediately if I don't have to, since just 5 years more at 35 years calculation it'd be more like 7.5k.

At the time I would be 66% vested it's more like 15k over 30 years I would not be getting now. So long as they don't let me go until I'm vested now in another 1.5 years, I'll be happy since I didn't have an intention of leaving until I finished a second degree anyway.

Basically, this just throws more frustration on the fire of this whole thing happening. At the end of the day I accept this is out of my control, but it seriously harshes on my equanimity...time to read more Marcus Aurelius...

J Boogie

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Re: Employer Vesting Schedule Change Woes
« Reply #1 on: February 19, 2019, 08:49:44 AM »
I imagine there would be serious legal trouble for this company if they terminated any employees who were previously more vested under the prior schedule. They'd probably vest them as part of their severance package. Otherwise, they'd just be asking for an expensive and brand-damaging lawsuit to save a few pennies in comparison.


Beardy

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Re: Employer Vesting Schedule Change Woes
« Reply #2 on: February 19, 2019, 10:34:01 AM »
That's a good point and definitely a negotiation point to keep in mind if things really go south. Thanks!

Chris @ Saturday Financial

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Re: Employer Vesting Schedule Change Woes
« Reply #3 on: February 20, 2019, 09:26:57 AM »
I worked for a company that merged, and the vesting schedule changed.  However, the funds I had in the 401k prior to the merge remained on the "legacy" vesting schedule.  It's worth talking to the Benefits team to clarify how your funds will be handled.