December 3, 2013
When investing in your company retirement plan it is important to know the vesting period. What is this thing?
When investing in your company retirement plan it is important to know the vesting period. What is this thing?
Vesting deals with the period of time your company requires you to be there before you get all of your matching money.
Right again, Katherine. Let’s recap.
The vesting period is set by the company and deals with when you will have full rights to the money they have provided to your retirement account (you always have access to your contributions).
For many 401k accounts you will see an all or nothing approach or a percentage approach. The percentage approach would look something like this. Year 1, you would receive 20% of their matching money. Year 2, you would receive 40% and so on until year 5, you would receive 100%.
The other possibility is the all or nothing approach. You get it all at 5 years, but if you leave the company at any point prior to that point, you get zilch! Know the rules!