Question about IRA and "employer matching"

[VWhed]

Hopefully one of you guys can help me out here.

I worked for a company for the last few years and was involved in their retirement plan. Things went "South" for he company in March of his year, they are still in business, but just barely. They filed for an extension because they didn't have enough money to pay the matching money into the retirement plan. I was one of the last remaining employees, but have since moved on to another job and would like my money as sort of a parting gift.....

My main questions are:

Do they HAVE to pay this money?

What if they go out of business / file bankruptcy?

Who (what organization) is "on my side"?

 

[sao123]

Originally posted by: VWhed
Hopefully one of you guys can help me out here.

I worked for a company for the last few years and was involved in their retirement plan. Things went "South" for he company in March of his year, they are still in business, but just barely. They filed for an extension because they didn't have enough money to pay the matching money into the retirement plan. I was one of the last remaining employees, but have since moved on to another job and would like my money as sort of a parting gift.....

My main questions are:

Do they HAVE to pay this money?

What if they go out of business / file bankruptcy?

Who (what organization) is "on my side"?

Unless you were completely vested, you are only guaranteed your deductions into the account.

 

[sygyzy]

sao123 - What does the term vesting mean when talking about an IRA retirement account?

 

[Dr. Detroit]

Contact your Plan Administrator, provided of course they have a 3rd party looking after it. Read your plan document to see what the terms of their match are.

 

[GuitarDaddy]

Vesting is the rate at which the the company contributions become owned by the employee. Some companies have an agressive vesting plan where you start becoming vested after a year and are fully vested(100%) after 3 or 5 years, others you aren't vested at all until 5yrs and maynot become fully vested until 10yrs.

When bankruptcy happens you could potentially get screwed out of undeposited vested matching funds if the company can't pay. You become one of the creditors of the company that have a right to a share of the liquidated assets of the company(debts for employees takes first priority among creditors). But in cases where the assets of the company are few, you may only get pennies on the dollar or nothing at all.

Assuming you company was on the up and up and has been reqularly depositing in a legit investment company, you should get at a minimum.
1. Contribution made by you through payroll withholding
2. Your vested portion of company contributions that the company has previously paid in


I have actually seen companies that went years not paying in company contribution, and not even paying in employee contributions deducted from payroll(highly illegal). Let's hope your not dealing with a situation like this. I actually did work for one company that hadn't paid deducted payroll taxes to the IRS in over two years, needless to say the IRS dropped the hammer on them bigtime. They levied over $100k in fines and penalties ontop of the back taxes owed, which of course the company couldn't pay. At the time I disassociated myself with the company, the owners and officers of the company were on the run from the IRS who wanted to put them in fedral PMITA prison. I was working as a turnaround consultant for them and those fools wanted me to register as a check signer and officer of the company:laugh:

 

[VWhed]

Originally posted by: GuitarDaddy
Vesting is the rate at which the the company contributions become owned by the employee. Some companies have an agressive vesting plan where you start becoming vested after a year and are fully vested(100%) after 3 or 5 years, others you aren't vested at all until 5yrs and maynot become fully vested until 10yrs.

When bankruptcy happens you could potentially get screwed out of undeposited vested matching funds if the company can't pay. You become one of the creditors of the company that have a right to a share of the liquidated assets of the company(debts for employees takes first priority among creditors). But in cases where the assets of the company are few, you may only get pennies on the dollar or nothing at all.

Assuming you company was on the up and up and has been reqularly depositing in a legit investment company, you should get at a minimum.
1. Contribution made by you through payroll withholding
2. Your vested portion of company contributions that the company has previously paid in


I have actually seen companies that went years not paying in company contribution, and not even paying in employee contributions deducted from payroll(highly illegal). Let's hope your not dealing with a situation like this. I actually did work for one company that hadn't paid deducted payroll taxes to the IRS in over two years, needless to say the IRS dropped the hammer on them bigtime. They levied over $100k in fines and penalties ontop of the back taxes owed, which of course the company couldn't pay. At the time I disassociated myself with the company, the owners and officers of the company were on the run from the IRS who wanted to put them in fedral PMITA prison. I was working as a turnaround consultant for them and those fools wanted me to register as a check signer and officer of the company:laugh:

The plan is through Oppenheimer, so I think it's legit... They have forwarded my contributions once a month, and I have already taken them out (long story). I have been 100% vested since I was enrolled. According to what I have been told by the company owners they have to pay the "match" because of the way the agreement was written. They had a crappy year last year and they were P.O.ed at a few of their employees and sort of decided that they didn't want to pay out this extra money, or at least draaaaag it out as long as they could. I wonder how long they can keep going on filing these "extensions".

 

[spidey07]

No, they do not have to pay.

Meaning only your money is covered. That's what bankruptcy is - absolving the company of outstanding payments.

A lawyer and class action suit is the only thing on your side. Don't expect anything, the companies lawyers have been structuring this backout plan for a long time as an out.