A 401(k) employer match or non-elective contribution is money your company contributes to your retirement account. Because those contributions are made by your employer, they may be subject to what’s known as a “vesting schedule,” depending on the options your company has chosen for its 401(k) plan.
A vesting schedule will define the amount of time you must work for your employer before you own the employer contributions.
What happens if I leave my company before I am fully vested?
If you leave your company for any reason before the funds are fully vested, you may forfeit all or a portion of the unvested funds. Any unvested employer contributions will go back into the employer plan’s “forfeiture account."
Forfeiture of unvested funds will occur upon the earlier:
The time at which you take a full distribution of all your vested funds after termination of employment, or
Once you have been separated from service for a period of at least 5 years.
Can I get forfeited employer contributions back if I’m rehired by the company?
What happens to any forfeited amount will depend on how long it has been since you left that employer and whether you have unvested funds in the plan.
If it has been more than five years since you left the company, you typically can never earn any more vesting on the amount that was forfeited. That forfeiture is generally permanent.
However, if it has been less than five years since you left the company, the time you work after being rehired may be used to advance the vesting schedule on that forfeited amount, provided you either did not take a distribution from the plan when you left or you return the full amount of any distribution taken from sources that were subject to a vesting schedule.
Please see your Summary Plan Description for more information about what amounts would need to be repaid and how long you would have to make that repayment.
You can learn more about how vesting works and the types of schedules that might apply to your situation here.