What is vesting, and how does it impact my transfer?

Understanding Vesting
Your account statement might mention that your account is fully or partially "vested." This refers to how much of your employer-sponsored retirement plan (like a 401(k)) you actually own and can take with you when you leave the company.
  • 100% vested? Great news! You own all the money in your account.
  • Partially vested? You only own a portion of the funds. The rest will stay with your employer.
How does vesting affect rollovers?
Vesting mainly impacts the amount you can roll over, not the process itself. We'll always work to transfer the portion you're entitled to.
Vesting and Leaving Your Job
When you leave a job, vesting determines how much of your employer's contributions to your retirement plan you get to keep.  
  • Your contributions are always yours: Any money you personally contributed to your 401(k) is 100% vested, meaning it's yours to keep, regardless of how long you worked there.  
  • Employer contributions depend on your vesting schedule: You only own the portion of your employer's contributions that you're vested in. This is usually based on how long you've worked for the company.
Example: some employers do not offer fully vested 401(k) plans until the employee has worked there for 3 years. If an employee with $10,000 in employer-matched assets that are 40% vested leaves a company, that employee is entitled to $4,000 of those funds. (Again, note that all of your contributions from your paycheck are yours; this only refers to the employer-matched funds).

What Happens to Non-Vested Assets During a Rollover?
When you roll over your retirement savings, only the portion you're vested in can be transferred to your new account.
  • Vested funds: These are the funds you own, including your own contributions and the portion of employer contributions you're vested in. These can be rolled over to your new account.
  • Non-vested funds: These belong to your employer and cannot be rolled over. They are typically forfeited when you leave the company.  
What is a forfeiture?
Forfeiture is when you lose the rights to the non-vested portion of your retirement plan. This usually happens when you leave your job before being fully vested.

The frequently asked questions, or FAQs, are intended to be helpful and to get you thinking in a more sophisticated manner about your account transfer and related issues. However, these are not meant for accounting, tax, finance, or legal advice, not intended to be exhaustive, and do not create any relationship or duty on our part to assist your particular situation. We offer no warranties on the accuracy or completeness of the information as there could be developments of any kinds, including, but not limited to, any changes in relevant laws and regulations.