- quote -

Not exactly right. You will get your contributions plus any earnings and or
growth on those contribtuions if there are any.

donut123 wrote:

- quote -

That would not be true *IF* you had received vested
contributions in prior years for those prior year
contributions. So, for instance, if you receive a match in
2002 that was vested under the schedule then in existence,
while they can extend the period for 2003 vesting, they
can't retroactively "unvest" the amount paid in during 2002.

Essentially, they can change the rules *going forward* but
can't undo prior benefits.

- quote -

Note that if you don't vest, the money does *NOT* go
directly back to the sponsor in a defined contribution plan.
So while it may reduce the cost to them of a match in a
future year, it would not end up coming directly back to them

- quote -

You have a right to the minimums defined under the law. The
catch is that your employer had created a plan that was more
generous than was required under the law--in that case, they
*can* amend the plan in the future all the way out to the
longest vesting required.

It's important to remember that there is no requirement that
the employer offer a plan, or that if they do that they
match at all, unless they commit to such via some other
contractual vehicle. Similarly, unless you have a binding
employment contract, you can also leave the entity on short
(or no) notice.

If they choose to make the plan less valuable, your real
recourse is to find another position. Now, in a poor job
market that may be a bit tougher, but a couple of years ago
the roles were reversed--potential employees generally held
the negotiating advantage. What we are now seeing is that
some of the perks that were put out back then when it was a
seller's market are now being pulled back as it has become a
buyer's market.

I do note whether an organization or individual seems to
"take full advantage" of such advantages or "play fair" and
remember that fact when fortunes change (as they will). So
even if you can't move right now, you may want to file away
this change if it appears to be driven not by financial need
but rather just by the "now we can do this" mentality. And,
when I'm hiring, I do want to look at what potential
employees did during the late 1990s--I think people on both
sides forget that loyalty is a two way street.

--
Ed Zollars, CPA
Phoenix, Arizona

My employer just made a similar change. Not only did they cut their
match significantly, but they also extended the vesting period from 1
year to 3. In other words, even though I have been participating in
the plan for a while now; because it has been less than 3 years, I am
not vested in any of the match.

When I questioned my employer, they told me they could change the plan
at any time! I also learned that if I am terminated prior to vesting,
I get nothing (other than my own contribution).

Had I not counted on the match and the plan as it was offered when I
started with my company, I would not have put so much into it (which
now can't be withdrawn without penalty). Also, based on what I learned
about being terminated prior to vesting, I am concerned that my
employer may chose to eventually terminate me rather than have me vest
in the match (or extend the vesting period by another couple of
years).

What rights to participants have?

All,

I'm hoping someone can provide some legal/financial insight on a
change my employer (w/ 25,000 employees worldwide) just implemented
regarding our 401(k) plan.

Initially the company was matching up to 6% of the employee
contribution which was deposited into my 401(k) account ever pay
period. Now the contribution amount will not be determined until the
end of the year dependant on whether the companies "financial goals"
were met (as an FYI the company stock has also plummeted to new lows
recently). In other words if the company does not meet it's goals, we
do not receive what was initially offered. Due to this all employer
matches will also be withheld until March 2004.

I've done some research and wasn't able to determine if an employer
can legally decide what % to match at any time. I understand employer
contributions are a "perk" but I've never heard of a company doing
such a thing.

Can anyone offer some insight on this change? Since it's very
possible that I may not receive any contribution, do you think it's
time to stop 401(k) contributions and change to something else with a
more long term profit potential (I'm about 25 yrs from retirement)?
Any advice would be helpful!

Thanks in advance,
Jason