Vesting means ownership and refers to how much of the assets in your account you own. You are always 100% vested in contributions you make to the account and rollovers from your other retirement plans. If your employer makes contributions to your account, you will earn ownership rights to them, including any earnings they may generate, according to the vesting schedule set by the employer.
Some plans have employer contributions that vest immediately, such as plans with a Safe Harbor feature. There are a variety of vesting schedules, such as 20% each year for 1-6 years or 100% after 3 years.
If you leave the company, your vested amount is frozen at that point in time. For example, the vesting schedule is 20% after 1 year, 40% after 2 years, etc. and you leave the company after 2 years then you will only be vested in 40% of the employer contributions. Any other employer contribution would be forfeited at the time you separate from the employer. Remember, you are always vested in the contributions you make.
For details on vesting for your employer’s retirement plan, contact the Recordkeeper, or reach out to the SMARTMap team: https://smartmap.worldadvisors.com/contact-us