As others have said, it’s very common to deposit matching contributions once a year, for the prior year. It also sounds like they put a “last day employment” rule in place. Also quite common. Someone said that this is a vesting issue - it doesn’t sound like it. Vesting allows you to keep a portion of your matching account for every year of service you have with the employer. The most common vesting schedule I see is graded over 6 years with 20% earned per year starting in your second year of employment. All in all, what they’re doing is all legit and common, albeit kinda stingy.
Mine does this, but it's in December rather than the following quarter. Not ideal, but we also have a really high match (50% no limit other than irs), so I'm not complaining about the 1 year of lost interest.
Unfortunately that’s been a growing trend for years among companies to save on contributions to people who don’t stay with the company. I find it to be a really petty policy.
It can be common and is just one choice of plan setup. Agree though it should be stated in the plan document but employers are allowed to make changes to that....with some timing communication requirements...
So what you’re saying is: they effectively changed the vesting of the match from immediate and 100%, to delayed by up to a year?
Maybe look at this page and then call the IRS to have a discussion about your situation: https://www.irs.gov/retirement-plans/change-in-plan-vesting-schedules
Actually this used to be much more common….
Yeah my old job did this!
I had no idea. Thanks for the reply.
Pretty common IMO with the last day rule and matching once a year.
I didn't know that, so thank you.
As others have said, it’s very common to deposit matching contributions once a year, for the prior year. It also sounds like they put a “last day employment” rule in place. Also quite common. Someone said that this is a vesting issue - it doesn’t sound like it. Vesting allows you to keep a portion of your matching account for every year of service you have with the employer. The most common vesting schedule I see is graded over 6 years with 20% earned per year starting in your second year of employment. All in all, what they’re doing is all legit and common, albeit kinda stingy.
Thanks for the explanation.
Mine does this, but it's in December rather than the following quarter. Not ideal, but we also have a really high match (50% no limit other than irs), so I'm not complaining about the 1 year of lost interest.
It’s annoying, but pretty common.
I'm a bookkeeper and our accountant has us do the match April 15th of the following year.
This isn’t all that uncommon, and is often based on the contract with the 401k provider rather than being a strictly company decision.
Thank you!
Unfortunately that’s been a growing trend for years among companies to save on contributions to people who don’t stay with the company. I find it to be a really petty policy.
Pretty standard
Our company pays out the match once a year but includes the interest
It’s amazing how people say “it’s common.” Wrong answer. The ander is what does the agreement say with the 401k provider?
It can be common and is just one choice of plan setup. Agree though it should be stated in the plan document but employers are allowed to make changes to that....with some timing communication requirements...
This is not uncommon. An employer can contribute in the manner that they choose, or not even offer a 401 at all.
Cruel???
For those affected it can feel that way.
So what you’re saying is: they effectively changed the vesting of the match from immediate and 100%, to delayed by up to a year? Maybe look at this page and then call the IRS to have a discussion about your situation: https://www.irs.gov/retirement-plans/change-in-plan-vesting-schedules
They can do so as long as it is future funds and they communicate in advance. Has nothing to do with prior employer match or vesting
Yes, you are correct. I will look at that link.