I have a (fidelity) 401k with company A. It has a balance of $X, of which $Y has been vested. I was laid off of company A three months ago. Yet, the balance still shows up as $X (with $Y vested).

I'd like to rollover this 401k to Vanguard. Does this mean I will lose $(X-Y) after the rollover?

Should I hang onto Fidelity for a little more time so the $(X-Y) also becomes vested?

Or this $(X-Y) is already lost to me (because of my laying off) and it's just showing up on fidelity's website due to some error? Can someone shed some light on this?

  • The additional funds will likely never become vested as that is reliant on employment. Check the fine print of your agreement for details, but that's the only way I've ever seen/heard of it working. – BobbyScon Dec 3 '16 at 2:06

If you attempt a transfer, only the vested portion will be sent. It may just take a bit more time for the account to reflect the forfeited funds.

  • 2
    Just to add anecdotally to this: I very recently did the same thing. I left an employer a year ago and only just got around to rolling over the 401K. Even up to the point of the rollover, the account balance still showed $X with $Y vested. I only got to transfer the vested amount (as expected), but was surprised how long the non-vested amount continued to show in the account. – BobbyScon Dec 3 '16 at 2:05

If you rollover the funds the only portion that will rollover are the vested portions.

The reason for the delay before the balance is reduced to the vested portion is that many companies have a policy that the treat small breaks in employment (generally up to two years) as continuous employment for many of their benefit programs. This covers people who are laid off and people who quit. By delaying the reduction they make their accounting easier.

What happens if you rejoin after a short break is up to the company, and can also depend the reason for the break.

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