Faster Vesting for Employer Matching Contributions
What does vesting mean?
Vesting refers to the percentage of employer contributions you have the right to keep if you change employers, usually based on the number of years you worked for the company.
Prior vesting schedule
Before 2002, employers chose, at a minimum, one of the two following vesting schedules for matching contributions:
- 100 percent vested upon completing five years of service
- 20 percent vested upon completing three years of service, plus 20 percent each subsequent year (100 percent after completing seven years of service)
New vesting schedule
For current employer matching contributions employers must choose, at a minimum, one of the following two vesting schedules:
- 100 percent vested upon completing three years of service
- 20 percent vested upon completing two years of service, plus 20 percent each subsequent year (100 percent after completing six years of service)
What the changes mean for you
Now you may earn a right to employer matching contributions more quickly.
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