After Layoffs, Employers Might Owe Unvested 401(k) Money

By on September 29, 2020

With mass layoffs commonplace during the COVID-19 pandemic, employers asked the Internal Revenue Service for advice on how to deal with the partial termination rule relating to employer contributions to their employees’ 401(k) workplace retirement accounts.

It’s an obscure issue, but it’s a big deal for the employees that it affects: It could mean thousands of dollars more credited to an employee’s 401(k) account. It’s also important that employers get it right. In a recent article by Forbes, McDermott Will & Emery partner Jeff Holdvogt advises that IRS auditors can catch this issue looking back at prior years.

“This is a complicated rule, and it’s not top of mind, so we could absolutely see employers realizing, ‘Hey, it turns out we incurred a partial termination. We have to go back and provide additional vesting,’” Holdvogt says.

Access the article.

Jeffrey HoldvogtJeffrey Holdvogt
Jeffrey (Jeff) M. Holdvogt advises clients regarding a wide range of employee benefits matters. He focuses primarily on the design and administration of complex pension, defined contribution and executive deferred compensation arrangements. Jeff counsels privately and publicly held corporations on ongoing day-to-day retirement and executive compensation issues, as well as employee benefits design and transition matters arising from corporate mergers, acquisitions and divestitures. Read Jeff Holdvogt's full bio.

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