Why is my account balance different from my vested balance?
In other words, what is vesting?
Every employer-sponsored retirement plan has a vesting schedule for the money that the employer puts into your account on your behalf. Since having an employer-sponsored retirement plan is considered an employment benefit to the employee, there is often a period of time the employer wants you to remain employed with them in order to receive the full benefit of their contributions to your account. This is called a vesting schedule. The vesting schedule can be as short as the employee being immediately vested upon plan eligibility or it can be spread out over as many as 6 years. You are always 100% vested in the money that you contribute from your paycheck or that you roll over from another plan. Vesting only applies to the money that the employer has contributed or matched to your plan.
You can check your plan highlights or the summary plan description to find out how long your vesting schedule is. If you don’t have these documents, ask your company’s benefits coordinator for a copy. If the vesting schedule is 5 years, and you only work there for 3 years, you will only get a portion of the employer contribution upon your withdrawal from the plan. Leaving your money in the plan after you no longer work for the company will not alter your vesting percentage – your vesting is based on your hire date and your termination date only.