We used to call them “rehires” back in the day: those employees who quit and were hired back. And it didn’t happen all that often. Many companies had policies not to.

They’re now called “boomerang employees, and now it’s different. Different times, different economy. Employees who left the nest decide they want to come back, and employers desperate for qualified, talented workers are happy to have them back.

How desperate? A recent survey by staffing firm Accountemps indicated that nearly all (98%) of human resources (HR) managers would welcome back a returning employee who left on good terms.

401(k) Considerations

Employers who do rehire former employees should keep the following four considerations in mind when it comes their 401(k) plans.

First, make sure that your plan and your Summary Plan Description clearly spell out how returning workers are treated. It’s ERISA, and everyone has to be treated the same.

Second, review how their vesting and forfeitures were handled when they left. Those same ERISA rules govern how non-vested benefits should be treated when an employee returns.

Third, use the appropriate eligibility rules to bring these employees back into your 401(k) plan. Those ERISA rules referenced above may – or may not – allow them to come in immediately.

Finally, keep the recent changes to the Pension Protection Act (“PPA”) in mind. The law made changes to vesting schedules that may affect these employees and how prior service should be credited.


Boomerang employees can be a valuable resource for employers. But employers should plan for the benefit matters in advance.

Image: National Museum of Australia, Aboriginal and Torres Strait Islander Affairs Art Collection