Joined: 25 Jul 2006
Location: Pittsburgh, PA
Forced to cash out my 401k...
i hope someone here can help me on this.
I lost my job 3 months ago. Serious financial hardship is forcing me to cash out the 401k I had with my previous employer. It's small but I have no other option (other than living on the street).
Anyways, what is the difference between the "total account balance" and the "vested account balance"? The difference on my end is the vested is $500 less.
Strangley enough, I received my quarterly statement and my cash-out check on the same day. The vested amount from 6/30 to their figures on 7/15 is more than $50. How could my account lose that much in 15 days?
Tue Jul 25, 2006 1:45 pm
BlankenshipFP Money Talk Advisor
Cash: $ 79.56
Joined: 05 Oct 2004
Your first question:
quote: what is the difference between the "total account balance" and the "vested account balance"?
Some retirement plans have a schedule for "vesting" in the company match. That is to say, in order to protect the company, there is a requirement in length of employment before you can claim ownership of the money that the company matches on your account. Typically this is a graduated schedule, for example, 20% vesting after 1 year employment, 40% after two, 60% after three, 80% after four and full vesting after five years with the employer. Apparently you were not employed at this company for more than just a few years.
Your second question:
quote: How could my account lose that much in 15 days?
Fifty bucks is not very much in the overall scheme of things. Not knowing the size of your total account or the holdings, it's hard to say why you experienced the decrease.
Joined: 11 Oct 2005
When cashing out a 401(k) you get the vested amount. As Jim says, the vested amount is the portion of the total that you own. That would be your contributions, plus company contributions that meet the plan's vesting schedule. When a 401(k) is cashed out early, there's always going to be some amount of company contributions that haven't vested yet.