401K - Vested/Unvested Matched Contributions

Ira wrote in news: snipped-for-privacy@4ax.com:

I'm not sure I understand your situation. When I was in a plan with partial vesting it worked like this: In year one, for every dollar I put in the company contributed $.20. In year two, $.40 etc. The amount they contributed varied, but once they put it in, it was mine.

We got paid biweekly, but the plan bought shares monthly. So every other Friday I had two cash deposits -- my contribution as part of my regular paycheck transaction and another transaction for the employer contribution. Then once a month I recorded the transaction when the plan bought shares of the mutual funds and my cash balance went to 0.

You imply that the company puts in $1 but you only get to keep $.20 if you leave after 1 year. What happens to the money that $1 earned? Do you have to give that back as well? If you have your account split over multiple funds, do you have to say "My money goes to Fund A and employer match goes to Fund B?" Suppose the fund you chose lost money so now those shares you bought with the company's $.80 are only worth $.50. Do you have to pay them the difference?

This doesnt quite answer the question, but your 401(k) statement probably shows you how much money is yours and how much is not yet yours because you're not fully vested. The website too, if the investment company has a decent website.

I have never heard of a plan that works like that. You're saying that the degree of matching depends on length of service? Are you sure? Every plan I've ever been in works exactly like Porter describes. The amount of match may vary from year to year based on company performance, but all employees get the same degree of matching (for example, 75 cents match on every dollar contributed, up to 6% of salary).

Q05 Deluxe is able to identify 401k contributions by source (e.g. Employee pre-tax, Employee after-tax, Employer Match). My current plan custodian (Vanguard) sends transactions to Quicken with that information included. In the Account Details for my 401k account, I can enter a Percent Vested. Then in the Account Summary Quicken shows

401k/403b Account Holdings as both Total Value and Est. Vested Value.

Is this what you wanted to know? The Quicken account can only have one value for Percent Vested - that is, you can't give it your vesting schedule. That would be nice for planning and forecasting purposes, but Quicken's planning tools are quite useless anyway.

I think you all are talking about the same thing. I've been 100 percent vested for more than a decade, so I don't pay close attention to what my plan says about that. But I don't think it's uncommon for an employer to say you are not vested 100 percent in the EMPLOYER'S contributions until you've been there five years. I think that's what the OP is saying. I don't think he's saying that the extent of the match changes based on longevity. Of course, the OP can speak for himself, so let's see if he does.

Thank you all for your posts.

While I certainly am willing to clarify, I do sincerely hope SOMEONE can provide the answer.

There has been much debate as to whether I stated the vesting in error. Of course, I did not.

The best I could find in copyable text, is straight from my plan:

** BEGIN QUOTE **

"We help your retirement savings grow by matching your contributions. After 12 months of service (at least 1,000 hours), you will receive an automatic Company match on your contributions to the Plan. The Company will match 100% of the first 3% of eligible pay you contribute, and

50% of the next 3% of eligible pay you contribute to your SPE Plan account.

You are always 100% vested in your contributions to the Plan, as well as any earnings on them. The Company contributions, including Company match and profit sharing (if any), and any earnings vest according to the following schedule:

Years of service

0-1 year 0%

1-2 years

25%

3-4 years

50%

4 or more

100%"

** END QUOTE **

At the risk of being repetitive, you get a full match. You only vest X% based on your years of service. So it sounds like, from the above, you forefeit back what you dont' get. Kinda like stock options when company's were doing those in the late 90's.

Since any solution involving only typing in 25% of what they put in is unworkable, because in a year every single prior transaction would need to be updated (and 1 year from then, further updated, etc). I am still hoping someone out there can help.

Thanks! Ira

On Sun, 30 Jul 2006 16:29:45 -0500, "DP" wrotf:

No, in your plan you only get a full (dollar-for-dollar) match on the first 3%. And a half match on the next 3%. But that is not your question, as far as I can tell.

I showed you how to enter a Percent Vested into your 401k account in Quicken, so that Quicken can show you an estimate of your vested balance IF you keep your "Employer Match" fund purchases separate from your "Employee Contribution" purchases. This is how Quicken can keep track of your vesting. Is that clear? No, of course you do not want to edit your old transactions every time your vesting percentage changes. Why would you want to do that anyway?

Uncle Fester,

Thank you for the updated corrections. What I meant by full match was to address all of the questions previously, which stated that they believed I would get 25% match and be fully vested in it, rather than the actual 100% of the company contribution being deposit with it being forefeit based on lack of vesting.

I do note that the account screen does provide for vested amount (thank you very much). I fear I cannot use this method because I cannot provide a dollar amount as being deposited by me per paycheck. I need to rebalance the percentages so that I wind up at the federal limit by the end of year, while never allowing a paycheck to go below

6% (for the match). As such, the dollar amount needs to change over the course of the year.

Thank you all for your advice ...

On 30 Jul 2006 17:07:19 -0700, "Uncle Fester" wrotf:

That is not a problem. I have adjusted my contribution percentage twice already this year, and my Vested Balance in Quicken matches my Vested Balance at Vanguard, to the penny.

In the paycheck wizard, enter your contribution amount and matching amount for each paycheck and Quicken will put the cash into your 401k account appropriately. Then when the money is invested, keep your Employee and Employer purchases separate as I explained earlier.

That is not a problem.  I have adjusted my contribution percentage twice already this year, and my Vested Balance in Quicken matches my Vested Balance at Vanguard, to the penny. In the paycheck wizard, enter your contribution amount and matching amount for each paycheck and Quicken will put the cash into your 401k account appropriately.  Then when the money is invested, keep your Employee and Employer purchases separate as I explained earlier.

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I am using Quicken Premier 2007

It should be very simple - the complexity is 1) how Quicken might report this to you and 2) the information available from the 401K Admin.

My admin is Vanquard. Each payroll period have have deducted 11% of my pay and my gives me a 8% match. All of my deductions are tax deferred and the % relates to the maximum contribution I can make per year tax deferred. I will exceed this on my last paycheck of the year and the contribution is reduced and I believe some of it becomes non-tax deferred (or after-tax) contributions. I optain a salary adjustment (hopefully) in April so each year April become my balancing point for contributions.

With Vanguard, I am able to download automatically into Quicken by Direct Connect or Web Connect. There are some issues with the rounding that I just deal with - the problem is on their side in the reporting verses how they download into Quicken. I am generally off a few 1/1000 of a share or unit in my investment and I chose to match what they show on the website - which is simple rounding.

When the investments are downloaded or entered, they are places into catagories of where the money or earnings come from. As I download, this is done automatic for me. I can obtain the same reports from their website and manually enter.

I have changed my Vested Percentage in the account from 100% to Zero. This not reflect on summary of Account Balances on the side (my left side of the window). It will reflect on the Accounts Holding Report within the Investment Account >Open Investment>Summary Tab>Scroll Down. My 100% Vested Accounts show a Zero Balance and the amount does differ from the left side of the window.

I d> Greets,