401 k

[Pcholmondeley]

I worked for a company in Houston and the 401 K vesting was 2 years I left just after 2 years and was deemed to be vested, later the company was sold after I left

The new company has a 5 year vesting policy and they are telling me my 401 K which they took over now falls under their rules of 5 years for full vesting and I will lose approx 30% due to this

Can anyone answer - Can they legally do this even though I never worked for the new company

Thanks in advance

Pete

[rayb]

What you are being told about liquidating the 401K is generally accurate. When the ownership of the company changes, you can be forced to have your 401K "distributed," as it is probably ineligible for a tax-free rollover. If distributed, it is possible that your tax liability would be as much as 30%, which includes a 10% early withdrawal penalty and a possible 15 - 30% income tax liability, depending on your income level.

You should first inquire if they offer or can recommend any tax-free rollover options, rather than withdrawing and cashing out the 401K balance.

--Ray B

I worked for a company in Houston and the 401 K vesting was 2 years I left just after 2 years and was deemed to be vested, later the company was sold after I left

The new company has a 5 year vesting policy and they are telling me my 401 K which they took over now falls under their rules of 5 years for full vesting and I will lose approx 30% due to this

Can anyone answer - Can they legally do this even though I never worked for the new company

Thanks in advance

Pete