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What is vesting?

The term vesting means that a secured right is in place and cannot be taken away. Vesting commonly 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.

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What is cliff vesting?

Cliff vesting means an employee becomes 100 percent vested (and entitled to the full amount of promised pension benefits) all at once. When an employer offers graduated vesting, the employee obtains the absolute right to his benefits over time. For instance, an employee might become 20 percent vested after one year; 50 percent vested after two years and 100 percent vested after three years. With cliff vesting, an employee who leaves the company before the designated vesting time will leave with no portion of the employer-provided retirement benefits at all.

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Can I leave my employee pension to my spouse or to my child?

It is generally possible to leave your employee pension to your spouse or your child, meaning that if you pass away, the payments will continue to be made to the specified survivor. However, whether or not you can do this in any specific situation will depend on the type of employee pension you have.

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What are the penalties for not paying back a loan out of my profit sharing plan after I leave the job?

Whenever you take out a loan against your employer’s profit sharing plan and aren’t able to repay the loan within the allotted time frame that the loan plan gives you, you can be penalized against the amount of the remaining balance on the loan. The amount that you pay because of the penalty depends both on the amount of your loan balance and the type of profit sharing plan your employer provides.

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Can I collect my spouse’s retirement benefits after his or her death?

If your spouse has a retirement plan and dies without collecting on it, it may be possible for you to collect the benefits s/he would have been entitled to. This right stems from a regulation in place under ERISA, the Employee Retirement Income Security Act of 1974. ERISA, which is a federal act, states that a pension plan must have something referred to as survivor’s benefits. These benefits mean that, should the holder of the pension plan die, the person’s spouse is allowed to receive fully vested benefits from the plan.

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