The term "vesting" refers to whether or not the money that has been set aside for you in a retirement plan is yours to keep if your employment is terminated. "Vested" benefits are those to which you have an absolute right even if ou resign or are terminated.

The plan summary should explain about its vesting schedule. In general, money you contribute to the plan (for example, through a 401(k) plan) is vested immediately. If you leave employment you will be able to receive your money back, or "roll" it into an IRA or, perhaps into your new employer's 401(k) plan. Money contributed by your employer will become "vested" after you have worked for your employer for a specified period of time. Some plans provide for no vesting until after a set period of time (generally 5 years -- known as "shelf vesting"), after which you will be 100% vested. Other plans provide for partial vesting on a graduated basis (for example, 20% vested after 2 years, 40% vested after 3 years, etc.).

(Reviewed 9-08)