401K accounts have numerous sub-accounts that track extensive financial transaction details. The on-line displays and formal statements produced by many 401k often give no clue about the inner workings of all the sub-accounts, including one that tracks employer matching contributions and vesting activity.
Vesting can be complex, in some 401ks each employer matching contribution has its own vesting schedule, in some plans there may be just be general cliffs. In essence some of each matching contribution is unearned until the particular vesting schedule that applies to it elapses. Even though there may be unearned (unvested) matching money in the account those deposits can grow but the ability to retain that growth is dependent upon the vesting status of the original matching contribution. Accordingly, if there are unvested matching funds in the account at the time of separation they will be removed along with their respective unvested earnings.
Vesting can be complex, in some 401ks each employer matching contribution has its own vesting schedule, in some plans there may be just be general cliffs. In essence some of each matching contribution is unearned until the particular vesting schedule that applies to it elapses. Even though there may be unearned (unvested) matching money in the account those deposits can grow but the ability to retain that growth is dependent upon the vesting status of the original matching contribution. Accordingly, if there are unvested matching funds in the account at the time of separation they will be removed along with their respective unvested earnings.
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