Work 401k Profit Sharing Plan accountability (retired, relationship, benefits, raising)
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I've been self employed and worked for small and larger companies in the past...
Looking back... self employed was by far the most lucrative...
In terms of employment... my one and only Union Job was clearcut... never a question about what was due or expected... it was my first engineering job out of school and learned a lot of real world application... sadly... that firm and so many others like it are long gone around here... small to mid size manufacturing in the SF Bay Area.
Employer has a 401k Profit Sharing Plan... this is how it is titled.
In 2007 the 401k match was temporarily suspended due to lack of profit and has yet to return.
My question is do rank and file employees simply have to take the company word regarding lack of profit?
Company line is there have been no profits the last 8 years... thus no 401k match.
There is NO legal requirement that any employer provide a 401(k) match (or a 401 (k) plan at all). Doing so is completely voluntary and may be suspended at will.
There is NO legal requirement that any employer provide a 401(k) match (or a 401 (k) plan at all). Doing so is completely voluntary and may be suspended at will.
And therein lies the crux of the situation.
Seems to also apply to just about any other benefits too...
Another benefit was 5 weeks paid vacation at 20 years... at year 19 it was changed to 4 weeks max and 120 hour max carry over...
Sometimes it's hard to follow the bouncing ball...
The only way around it... as far as I know is a specific employment contract.
The son in law of one of my neighbors has been the CEO of several well known firms... he always has a Employment Contract... it covers things like a company car, Business Class Travel and even a termination clause... the last company contract had a 500k termination clause where the board could terminate him at will provided they pay 500k severance and he keeps the Mercedes AMG... which they did and now his wife is driving the AMG...
As a former small business owner, we had a 401k with a profit sharing component. In reality it was an after the fact contribution based solely on how I felt at the end of the year. We called it profit sharing, but because it wasn't an upfront match (eg, 3% on each check), technically it wasn't profit sharing. It was an "after the year has finished" contribution, from the company to the 401k.
The 401k admin would then work on how to divvy it up among the participants (there are a couple different ways to divvy an after the fact contribution).
We always contributed something, and obviously the better the year, the more we gave. But being in an industry known for huge cyclical swings, I was reluctant to upfront match.
Quote:
Originally Posted by Ultrarunner
The son in law of one of my neighbors has been the CEO of several well known firms... he always has a Employment Contract... it covers things like a company car, Business Class Travel and even a termination clause... the last company contract had a 500k termination clause where the board could terminate him at will provided they pay 500k severance and he keeps the Mercedes AMG... which they did and now his wife is driving the AMG...
It sounds like there is more eating at you than just the 401k.
The CEO at my current job did make a comment about their contribution being called profit sharing once. He said they will probably continue their small match as long as their is a profit. Again, I am not unhappy with my compensation at all; they chose the model of paying us handsomely and providing access to benefits but paying only a small amount into benefits on our behalf. The math works in my favor.
Sounds like "Profit Sharing" is a misnomer or at least subject to interpretation with no defined universal meaning.
I've been the unofficial go to person for the last couple of years... and more so now since HR quit over a year ago. The new hires have questions and come to me since I still do new hire orientation...
It does sound logical when there is a profit... one would/could intelligently expect a share.
In the scheme of things it would amount to several hundred dollars per participant employee or $500 for someone earning 50k and contributing 4% to the 401k with a 1/4% per percent match.
There was a time when defined benefit pensions were the norm and when the change to defined contribution came along... it was a big deal... now, even defined contribution has eroded to really mean nothing if there is no accountability.
in 1998 I left a lot of money on the table through no fault of my own... I was 20% vested when the company merged... it cost me 9k... money the was put into my account from the 401k match, bonus and stock plan... and this was a lot of money to me... I was only one of two with any significant forfeiture. Others had chosen not to participate or were significantly or fully vested.
Last edited by Ultrarunner; 09-20-2015 at 10:00 AM..
in 1998 I left a lot of money on the table through no fault of my own... I was 20% vested when the company merged... it cost me 9k... money the was put into my account from the 401k match, bonus and stock plan... and this was a lot of money to me... I was only one of two with any significant forfeiture. Others had chosen not to participate or were significantly or fully vested.
I am not a lawyer, but I don't think this is legal. I remember when our company was bought, everyone became 100% vested immediately.
I think there are two options--100% vesting, or if there is a rollover, vesting remains current. But I don't think losing unvested money is an option.
Again, I am not an ERISA lawyer, but I have never heard of participants losing unvested money due to circumstances beyond their control.
I am not a lawyer, but I don't think this is legal. I remember when our company was bought, everyone became 100% vested immediately.
I think there are two options--100% vesting, or if there is a rollover, vesting remains current. But I don't think losing unvested money is an option.
Again, I am not an ERISA lawyer, but I have never heard of participants losing unvested money due to circumstances beyond their control.
I believe you are correct but my experience with this is very dated and was in another state. My experience was not with a pension though; they might be different.
It has most certainly been a sticking point for me...
I did make an inquiry at the time to my Congressman who happened to be investigating the company that spun us off... I said the money had to have gone somewhere, since I don't have it.
The response was I could take up where I left off with all monies in place and my service would be bridged should I again fine myself working for Columbia HCA within the next 5 years.
A few years later Congress did tighten up the vesting schedules and under the new plan... I would have been either 40 or 60% vested instead of 20%.
Some I know... just through dumb luck have made out very well... one was hired at a startup and part of the compensation was stock... he was kind of a screw up and moved overseas for a few years to Thailand... years later he found out he had a windfall of over 100k that he didn't know anything about...
I think a career in employment law would be fascinating since it effects just about everyone and most have little or no clue how things work...
It would seem, absent an employment contract or bargaining agreement... employers pretty much have free hand when it comes to "Benefits"
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