What is Vesting?

Vesting is commonly referred to in employer-sponsored retirement plans with company contributions. Vesting gives employees the right to employer-provided retirement funds over a period of time. This is an incentive for employees to stay with the company longer to earn the full rights to these assets or benefits.

A vesting schedule can provide for an increased benefit gradually over a period of up to six years or may provide for the full benefit within three years. A typical vesting period is 3 to 6 years. Some plans may even allow for immediate vesting of employer contributions.

Employees are always vested immediately in their own contributions to an employer-sponsored retirement plan. Once you’re fully vested in your employer’s contributions to your retirement plan, you’re still subject to the plan’s withdrawal provisions.

Talk with your financial professional to learn more about how you can maximize your retirement savings.

Retirement Smarts.
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