Vesting Schedule - 401k's

[Tod]

What is the name of your state? KS

This is a generic question. I am interested in how vesting schedules are suppose to or actually do work. If my company contibutes so much per month through matching my contribution, and I leave before all or some of that gets vested per the vesting schedule, what do I have to return to the company? For the sake of clarification, suppose the company contributed $1000 before the first vesting date and I quit before that vesting date. Does the plan adminstrator return to the company only the $1000 or the $1000 plus its earnings and losses? I would assume specifically $1000 is cashed out of the investment funds and returned to the company.

Assuming on the anniversary/vesting schedule date 25% is vested and I stay past that date, then only $750 would be cashed out and returned. Correct?

Next, if I stay another 6 months such that the total company contribution is now $1500 and I am still in the 25% vesting period, is my 'liability' (the unvested part) 75% of the $1500, or 75% of the $1000 that was in the plan at vesting date plus 100% of the more recent $500 contributions, or something else?

Finally, if I stay long enough to be fully vested (presumably 4 years in this scenario), are all past and current employer contributions now fully vested or only those contributions 4 or more years old. (This is really another way of asking the prior question.)

Thanks for educating me.What is the name of your state?

 

[Beth3]

Vesting refers to the amount of employer contributions made to an employee's retirement plan that the employee "owns" through years of service if he/she leaves employment.

So...if your employer has a 20% per year of service vesting schedule (which is very common) and the employee leaves after two years of service, he takes 40% of the employer's contributions with him and forfeits the rest, which revert back to the general assets of the Plan. Employees always own 100% of whatever contributions they made to the Plan.