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patty1234304 · Oct 24, 2008, 11:53 PM

I was with my previous employer for 8 years, I became vested after 5. I never contributed to a 401k. What exactly are the benefits of being vested, i.e pension for retirement. My question is: Is there any money owed to me that I could take in one lump sum now, not retiring?
- confused

Fr_Chuck · Oct 25, 2008, 05:49 AM

Was the company putting funds in the plan, or did they just offer matching funds for money that you would put in.

If you or the company never put any money into a 401K, then there is no money to get out.

Vested means you get all of the funds the company would have put in for you.

You should be getting at least a yearly report of the money in the plan.

You can withdraw if you are not working there if there is any money, but you will pay taxes on the money ( about 25 percent and pay a penalty of 10 percent)

ebaines · Oct 27, 2008, 07:06 AM

Vested means different things to different companies. A few possibilities:

1. If they have a traditional pension plan (a defined benefit plan) then this means when you retire there will be a monthly pension check for you. Don't get too excited - if you worked there only 8 years and are relatively young it's probably not much, and many companies restrict people who leave before retirement from starting payments until they reach age 65. If the amount is small, some companies will work with you to move the money to a rollover IRA - this is to reduce the amount of paperwork the employer has to maintain for all the small accounts of former employees.

2. As Chuck says, this may mean that the company put some money into a 401(k) on your behalf, but it may be that they would have only done this if you had contributed some yourself (company match).

3. Some companies have a profit sharing plan, which is like a 401(k) but entirely funded by the company. Profit sharing plans typically vest after several years of employement.

I suggest you call the HR department and ask what the progams and your options are.

ScottGem · Oct 27, 2008, 08:42 AM

Vesting simply means that you have earned an interest in something that is irrevocable. So, if you were 50% vested, then you would have a right to 50% of the value of a plan.

So for them to tell you that you became 100% vested after 5 years means there had to be some plan you were vesting in.

Since you weren't contributing, its unlikely to have been a 401K so its unlikely there is a lumpsum available to you.

You do need to contact your old HR department to find out what plans they have.