4

I have a (fidelity) 401k with company A. It has a balance of $X, of which $Y has been vested. I was laid off of company A three months ago. Yet, the balance still shows up as $X (with $Y vested).

I'd like to rollover this 401k to Vanguard. Does this mean I will lose $(X-Y) after the rollover?

Should I hang onto Fidelity for a little more time so the $(X-Y) also becomes vested?

Or this $(X-Y) is already lost to me (because of my laying off) and it's just showing up on fidelity's website due to some error? Can someone shed some light on this?

Swamy g
  • 143
  • 5

2 Answers2

3

If you attempt a transfer, only the vested portion will be sent. It may just take a bit more time for the account to reflect the forfeited funds.

JoeTaxpayer
  • 172,694
  • 34
  • 299
  • 561
2

If you rollover the funds the only portion that will rollover are the vested portions.

The reason for the delay before the balance is reduced to the vested portion is that many companies have a policy that the treat small breaks in employment (generally up to two years) as continuous employment for many of their benefit programs. This covers people who are laid off and people who quit. By delaying the reduction they make their accounting easier.

What happens if you rejoin after a short break is up to the company, and can also depend the reason for the break.

mhoran_psprep
  • 148,961
  • 16
  • 203
  • 418