I was laid off 9 days before fully drawing down my 401(k) – what are my options?

Companies have no loyalty to their employees. They don’t see you as people, just numbers on a spreadsheet that can be manipulated to increase winning numbers. No matter what they say, a company will squeeze you out of every ounce of your worth before throwing you to the curb the moment you stop being useful. Unfortunately, one person realized this too late.

Important points

• Companies don’t owe you loyalty and you shouldn’t expect compassion for you.

• HR departments are not your friends, they exist to protect the company.

• Retiring early is possible and may be easier than you think. Click here now to see if you’re ahead or behind. (Sponsor)

One unfortunate Reddit user found this out the hard way when he learned he had been laid off just days before his 401(k) went into effect. They brought their concerns to the R/Personal Finance community and asked for advice on what they could do. Here’s what they said.

Please remember that all advice you find online, especially on Reddit, including this article, is opinion. You should always speak to an expert before making any legal decisions regarding your employment.

The question

A button that says 401K.

The author of the post in question was fired in 2023, just nine days shy of completing two years with the company, which is when the company’s 401(k) plan would be fully vested. As a result, they lose $15,000 in uninvested funds. They said they had contacted the company’s human resources department, which had so far ignored them. They asked the community for advice and help.

The community reaction

A person counting his savings.

One of the most common responses came from people reminding the author that HR is not their ally. Human resources departments exist to protect the company, not the employee, and they will do everything they can to help the company and protect their own jobs. Therefore, some commenters recommended contacting the 401(k) custodian directly to determine when the plan will actually vest because the company and the custodian actually measure the “year” in different ways. For example, custodians typically count years as the number of hours worked and not necessarily as a calendar year, so the author may have already passed the blackout date.

It’s best to find out the actual details before proceeding.

Another recommendation was to simply ask the company to keep her on the payroll (even without actually getting paid) until the vesting date. It was a long-term recommendation, but worth asking for.

Many people recommended asking the company for official 401(k) documentation and negotiating the use of saved PTO or termination date before signing a severance agreement.

Aside from that and a few edge cases that could change the situation, the employee had no choice but to speak to the NLRB for advice.

Ultimately, in America, a company can fire an employee for almost any reason at any time, even if that reason is obviously to avoid vesting the 401(k) and ruin someone’s retirement, and there’s not much that can you can do to prevent it. Almost all commenters agreed that the author should document everything and receive a copy of all communication in case it needs to be used later.