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What does this mean exactly?
What is vesting?
thank you

You are 20% vested after 2 years, 20% vested each additional year. So, you will be fully vested after 6 years.

2007-07-16 02:36:06 · 4 answers · asked by mark h 2 in Business & Finance Personal Finance

4 answers

well...in normal words, it refers to the amount that you really really really have.

for example, your employer contributes to your 401k plan...if you quit or get fired do you get to keep the money your emploer contributed...not really...after 2 years, you get 20% of the employers money...after 3 years 40%...and so on with your formula...so after 6 years of work, all the money your employer put in is now officially yours. so if you quit or get fired after 6 years, you get all the money

2007-07-17 02:57:18 · answer #1 · answered by zioncanyon 3 · 0 0

Vesting is the money that is "yours" when you leave a company. You are always 100% vested on money you contribute to your 401k, but the money your employer contributes usually has a period of time before it's vested.

That time is the time it takes for the money to actually be yours forever. For you, if you leave after 1 year of work with your company, you'll have 20% of the money they've contributed after you leave. The rest of the money they contributed will leave your account and go back to the company. So after 6 years, you'll be able to walk away with 100% of the money they contribute to your 401k.

Actually you'll more likely be able to walk away with 100% of what they contributed the first year, 80% of what they contributed the 2nd year 60% of what they contributed the 3rd year and so on.

Vesting is a legal way of cutting corners on the whole 401k program and keeping employees in their jobs. More people stay longer in jobs when they have a lot of money that isn't vested yet.

2007-07-16 02:49:15 · answer #2 · answered by J P 4 · 1 0

Vesting is on the money the employer matches to keep you working for them.
If you leave you job within two years you leave the company money but after 2 years you get to keep 20% and when you have been there 6 years all the money is yours.

2007-07-16 02:42:26 · answer #3 · answered by shipwreck 7 · 0 0

you do not probably want to have the money sent to you till you recognize the outcomes. listed right here are some to contemplate: in case you have the money sent to you, they'll withhold 20% for taxes. in case you retain it, you may have that quantity of money extra on your earnings and you will pay a 10% early withdrawal penalty (till you're over fifty 9 one million/2). reckoning on your tax bracket, this might value you a significant volume of money - your state will want its proportion, too. in case you later choose for you probably didn't want to pay the taxes on the money, you will might desire to place the whole volume in (at the same time with the 20% already withheld), into the hot 401k and you will have worry arising with that quantity of money. If in any respect obtainable, roll all of it over and enable it proceed to enhance for you till you retire -- taking it out early is killing your golden goose!

2017-01-21 05:15:14 · answer #4 · answered by Anonymous · 0 0

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