How Does Being Vested Effect My Pension?
Posted on Jul 17, 2020 7:00am PDT
Q. Mark A., of Kansas wants to know: "How does being vested effect my pension?
A. Brett, from the QDRO Department of Pension Evaluators & QDROS Of
Troyan, Inc Associates Groupreplies: "When one is
vested, that employee has an absolute or nonforfeitable right to their pension.
When a retirement plan is fully vested, the employee has an absolute right
to the entire amount of money in the account. It is a basic right that
has been granted, or has accrued, and cannot be taken away.
The portion
vested cannot be reclaimed by the employer, nor can it be used to satisfy the
employer's debts. Any portion not vested may be forfeited under certain
conditions, such as termination of employment. The portion invested is
often determined pro-rata.
ERISA plans must contain an approved vesting schedule by which a plan participant
attains the rights to a pension.
Union plans, known as multiemployer plans, have a different set of rules.
A plan may have a vesting schedule that is more generous, but not one
that is more strict.
Some
non-ERISA plans do not offer vesting, in that an employee must qualify for retirement
to receive a benefit; termination of service, at a time that the employee
is not eligible for a pension, results in loss of all benefits."
Brett Disdale
Lead QDRO Consultant
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