Former employer withdrew from my 401k
Dear Blind, I received a retention bonus from a former employer (I work at Magic Leap currently) Upon executing the offer, I received half of the amount. I contributed let's say 2k of that bonus to my 401k which was matched $ for $, 100% vested. In my retention bonus agreement it detailed that if I broke it, that amount would be repaid to the company in full or part by "retaining the amount from my final wage, including without limitation accrued but unused paid time off." I left the company, thereby breaking the agreement. I just checked my 401k balance and it was less than expected, I started trying to figure out why and found a withdrawal from my 401k of 4k. Dug into it and it turns out it was made at my employers request to repay the bonus (2k from me + 2k from the match). It was never communicated to me that this would happen. I'm no lawyer but this seems illegal. Please help!
You received bonus money for retention. Only if you stay. You put $2k into your 401k which the company then matched dollar for dollar and added an additional $2k. They can not retroactively take away the match (unless there’s anything in your employee handbook), even if you used money that you have to give back. The money you have to give back is the $2k, but they can NOT just take it from your account. It explicitly states in your contract that you will REPAY them back, not that they will reach in and take it. This is very illegal. Call a lawyer.
It’s possible they can remove the match depending on the plan terms and especially if it’s not immediately vested. They shouldn’t have removed the $2k contribution and instead you should have had to pay that when you repaid the retention bonus.
Nope, it was all fully vested.
Taking your contribution away is never ok. It's YOUR money to begin with.
They withdrew $2k but when the company recovers a deposit it undoes the match. So it *cost* you $4k. Now you need to ask them WHY they withdrew it from your 401k and cost you double instead of in the agreed-upon manner.
Right. If I had known, they would take it out of my 401k. I would have just contributed 2k from my paycheck.
It was in the employer’s interest to withdraw this way because they’d double dip (the match comes out of their pocket, too). Call them out yourself, if no traction, seek an attorney who will write a nice letter. If the amounts are too small for them to pick your case up, blast them.