Vesting determines what is yours to keep if you leave employment. A participant must be 100% vested in his benefit when he reaches retirement age. 100% vesting is usually provided upon death or disability as well. Qualified Plans must vest benefits at least as rapidly as one of the following tables.
Years Years of Service Vested % of Service Vested % 0 0% 0 0% 1 0% 1 0% 2 0% 2 0% 3 0% 3 20% 4 0% 4 40% 5 100% 5 60% 6 80% 7 100%
If a plan is Top-Heavy (more than 60% of benefits go to the Key Employees), the choices default to one of the following tables, or optionally a more favorable one. Matching contributions under a 401(k) plan must be at least as favorable as these.
Years Years of Service Vested % of Service Vested % 0 0% 0 0% 1 0% 1 0% 2 0% 2 20% 3 100% 3 40% 4 60% 5 80% 6 100%
A Plan that provides that an employee must complete more than one year of service (maximum of 2 years) must vest participants 100% upon entry into the plan.