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