Thread regarding VMware layoffs

This is a good question as when you move from one company to other, the 401K of previous company stays as is till you roll it over. Here if you get laid off then the previous company (VMW) does not exist anymore.

So I called Fidelity and here is what they said - First of all it will be totally BC's decision as to what they do and Fidelity has not received any information about any corporate activity as yet. Having said that he gave me few options that could happen based on past mergers etc.

1. BC can decide to let VMW 401K be as is and in that case if you are laid off, you can keep your funds in VMW 401K till you move it to your new employer or IRA or till BC decides to close the fund
2. BC can decide to close the VMW 401K plan and move everything to BC 401K plan. In that case VMW 401K will be rolled over to BC 401K for both - those who stay with BC and those laid off. You will have to choose new investments as per BC plan and I am not sure what happens to Brokerage Link investments ... not sure if BC has that option and will laid off people get that option or not.
3. If you are laid off then you have another option to roll everything into an IRA (I am not sure if this is an option if you are retained by BC)
4. In a rare case, a company can force old 401Ks to be rolled into IRAs for laid off folks. In that case they will designate a holding company and your IRA will be in that company. If that happens then you have a choice to go to Fidelity IRA if you have investments in Brokerage Link or Fidelity Funds instead of that new holding company IRA.

According to that agent, mostly likely actions are 1 or 2 and if you are laid off you will always have an option 3. Option 4 is not very likely but cannot be completely ruled out. Again he said, this is BCs decision only and none has been taken. So probably nothing will be known till close happens (Oct 30). I am guessing we will not get answers from VMW leadership on this topic as well as I don't think they have a say in or knowledge of BC's state of mind. You will also get 1-2 month notice on any action.

Whether or not assets can be transferred "in kind" (meaning to transfer the asset without liquidating it) depends on the asset. Fidelity has many mutual funds, etc. that it will not transfer "in kind" but it also has many more that it will. I experienced this first hand when I transferred personal investments from Fidelity to another broker.

If you are concerned about this, give Fidelity a call to discuss your options.

VMW is contracting with and paying Fidelity to act as custodians of your 401k. When/if they stop doing this the plan will be terminated. It’s your money, and you’ll have the option to roll to an IRA, or transfer to your new employer’s 401k — Broadcom or other.

These concerns are unfounded:
1: They cannot force you to liquidate your positions.
2: what happens with your 401K is between you and Fidelity

This is not accurate. 401k positions are frequently liquidated when transferred. If the 401k is shut down it's liquidated and transferred to a rollover account where you have to reinvest it yourself. The rollover process can take a day, or it could take weeks. I had this happen to me in a prior job, 401k plan got dissolved then it was going to be "transferred" to a rollover IRA which took 2 weeks and this was ALL with Fidelity. The OP is right, my money was out of the market for the entire 2 weeks. Luckily I did not lose much.

The reason is takes so long is because this is going through a bulk transfer process which is a different workflow to you just calling them and asking to transfer assets which typically happens in a day or two.

The lack of clear information regarding this is totally unacceptable when it potentially has financial ramifications.

There's a good lesson here.

If you think leadership is holding something important back from you, it's likely that you just don't understand what's going on.

These concerns are unfounded:
1: They cannot force you to liquidate your positions.
2: what happens with your 401K is between you and Fidelity. You can leave it with them and have it convert to an IRA or you can transfer all of your holding to another IRA, should you have one. There is no requirement to force you to liquidate your positions before they are transferred.

You will generally want to roll over your 401(k) into an IRA. This will give you an expanded set of investment options (you'll be able to buy individual stocks rather than just mutual funds) as well as some other advantages. Talk to Fidelity about it.
https://www.fidelity.com/retirement-ira/401k-rollover-ira

If only there was some sort of way to look this up using some technology other than posting on an anonymous board. Your 401k is not tied to the company you work for, it is managed by another company (Fidelity in our case). If/when you leave, you keep the funds and can keep investing, but if your new company uses another (such as Vanguard) to manage 401k, you will end up with separate accounts. You can either leave the funds in Fidelity or move them to Vanguard (in this example). The one limitation (in the US anyway), is you can only move funds once per year. So if you left say VMware for a company that uses Vanguard and moved you funds, then moved jobs again in 6 months, you couldn't move your 401k to the newest company until 12 months passed from the original date you moved from Fidelity to Vanguard.

These concerns are unfounded:
1: They cannot force you to liquidate your positions.
2: what happens with your 401K is between you and Fidelity. You can leave it with them, without making any changes or selling anything, or you can transfer all of your holding to another IRA, should you have one. You could liquidate all of your holdings and take a lump sum payout but that does have significant tax implications and is probably the worst option. There is no requirement to force you to liquidate your positions before they are transferred.

But don’t take my word for it. Just google it. Here’s a pretty good explanation. https://www.merrilledge.com/article/managing-retirement-assets-in-event-of-layoff

Your 401k is managed by another company- Not VMW. As someone who left VMW all I did was simply transfer that account and its assets to the new account at the new gig. If you are unsure, give the company that manages it a call.