Simmor14

Good to know!! Thank you MsElui I've already finished up but I did wonder about that and whether their might be a point whereby the vested turns into current.
I'm going to investigate and weigh it all up tomorrow.
Thanks everyone for your comments I really appreciate it.
LtCol, my husband and I are retiring but thanks for the tips!
Nun, I'll look into the NZ side of things, thanks so much.

Pulaski

But if you're retiring you should have said so, because that opens up all the draw-down end game options and strategies.

Simmor14

I said I'm not intending to work when I get to NZ what changes?

AdobePinon

Your age. It matters.

Simmor14

I'm not retirement age, 39. My husband, 46 is retiring from the RAF, we'll be living off his pension and a veggie patch

Pulaski

For the lack of other information it sounded like you were "taking a break".

What changes is what you do, what you're allowed to do, and the order in which you draw and drawn-down your pension savings. For example you might pull out your 401k savings before you draw anything else, so you have low/no other income and your tax rate is very low, therefore you pay very little tax on it. And depending on your age you don't face the 10% early withdrawal penalty. The permutations can be almost endless.

nun

I don't think you'll be happy when you see how NZ taxes foreign retirement accounts. The treaty gives no protection from the taxation of current gains within a retirement wrapper. So withdrawing the 401k funds isn't as bad an idea as it at first appears.

Vesting usually requires a minimum work period, often 6 months or maybe a year. Longer is rare unless it is a defined benefit plan. How lond did you work for your employer and what was the vesting schedule. Your HR department will give you the details.

kodokan

Not in our experience of 401ks. Hubby's current company is a 6 year vesting schedule, with 0% for Year One, 20% for Two, 40% for Three... 100% after Six. His last company had something based around 0% for the first three years, but that was a European transfer so he became immediately vested, so I didn't take too much notice. These are large multinationals in a competitive industry, so I expect what they're doing is standard HR practice for the recruitment and retention of staff.

Owen778

I agree. Our 401k company match vests fully after three years. And yes, I had the same situation, as I counted as fully vested when I first transferred to the US.

nun

Wow, 401ks have certainly changed since I had one around 10 years ago. Back then vesting was a lot shorter. Just another example of the US worker getting done over by the employer......"Go Bernie" Seriously everyone should be worried when the ability of people to save for retirement is reduced so substantially.

Owen778

Vesting only applies to the company match. All money actually contributed by the employee is available to them at all times. While receiving the company match immediately is obviously better for the employee, I don't see that having to wait to vest is inherently unfair.

kodokan

I think it's totally unfair. It's not a free gift of corporate benevolence, it's part of the worker's compensation package for the services they have provided. The company is benefitting from the worker's efforts this month/ quarter/ year, not 3..5..7 years down the line when the money may or may not become unlocked.

I could accept the argument of vesting of up to two years, because the employee perhaps isn't as useful in the role as a more experienced staff member, and job hopping is disruptive and expensive for employers; the invested amount can therefore be mentally offset against the recruitment and training costs of their replacement.

But this extended withholding is just corporates doing it 'because they can' and it improves their bottom line. There is very little justification for it being fair.

nun

I've had jobs with immediate and 6 month vesting of employer contributions, so when I see periods like 6 year's it's certainly a reduction on the benefit if someone has to leave before the vesting period.......6 years seems excessive to me.

I come at this remembering when pensions were entirely paid for by the employer....then we got 401ks and DC plans and some of the burden was placed on the employee without a corresponding increase in salary. So the result was a net reduction in salary as the employer shifted retirement saving onto the employee. Then the proportion of the employer contribution started to fall....from maybe dollar of dollar match upto the IRS limit down to a max of 3% of salary or sometimes no match. Extending the vesting schedule is another way to cut costs at the expense of the employee.....this is where unions serve a useful function.

Owen778

I admit that's a pretty persuasive argument. Actually, I see something else as even more persuasive: if employment is at will, and the employer can terminate employment immediately, then all compensation should also be immediate.

kodokan

Previous company had the rule that if you were laid off (not fired for cause), then you were immediately vested regardless of length of service. This strikes me as very fair.

Current company doesn't seem to have that rule, which is surprising as it is otherwise a much more benevolent employer for benefits (better match, startlingly cheap health insurance, etc). Since there's not much we can do about it, we're hoping that hubby can either stay there long enough for it not to be an issue, or that he'll get poached by a company who'll arrange a starting bonus to compensate for the vesting loss. He's senior enough that this is a reasonable prospect, but it still sucks for more junior employees.