In Retirement, What Does Vested Mean?
- Employer contributions to your retirement may vest over time.Roll of dollars in nest image by Mykola Velychko from Fotolia.com
Contributions made to defined contribution plans, such as a 401k, may become available after a number of years of service. Dollars contributed to these plans by an employee do not vest and belong to the employee; vesting only applies to employer contributions. - Pensions may be locked until employees obtain enough service years.Geldkassette image by Tribalstar from Fotolia.com
Defined benefit plans, such as pensions, may vest after a formula involving age and years of service. Employees may be required to meet a minimum number of years of service or minimum age to qualify for any benefit, which expands as the worker continues in service and ages. - Some plans vest early when employees become disabled.Crutches image by Megan van Dyck from Fotolia.com
Some plans allow for immediate vesting to a family upon the death of a loved one. Vesting schedules may be shortened in the event of disability.
