Is my employer required to retroactively vest in my 401K plan?

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Is my employer required to retroactively vest in my 401K plan?

My employers is going to start a 401K matching plan that is vested. The plan is to start matching as of the person’s one year anniversary but that it doesn’t vest until their 5 year anniversary. As someone who has already been here for 5 years and contributed to my 401K plan (even though there was no matching incentive when we first signed up) the entire time, is my employer required to retroactively match the amount of money I have already contributed?

Asked on May 19, 2011 under Employment Labor Law, Massachusetts

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

No, they do not need to do this. When an employer decides to match, that matching is only prospective--from the time they elect to implement it--not retroactive; the law does not require the employer to retroactively provide a benefit for periods of time that it was not, in fact, providing that benefit. Consider: if an employer's decision re: matching were retroactive, does that mean that if an employer previously matched, but no decided to not match, it could go back and take out the money that it had put into employee accounts? Clearly not--and similarly,  they don't need to go back and retroactively put in money.

Many people do not get matches--for example, all the many self-employed. You are fortunate that going forward, there will be a match.


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