What is a graded vesting schedule?

Your plan may choose to provide a cliff or graded vesting schedule. For example, a two-year graded vesting schedule means you will be entitled to 50% of the accrued contributions after one year of service, and the remaining 50% after the second year. Your plan’s vesting schedule is used to determine your vested percentage and to calculate how much employer contributions you are entitled to. See this article to learn more about vesting and below for examples of graded vesting schedules:

2-Year Graded Vesting Percentage Vested   
Prior to 1 year of employment   0%  
After 1 year of employment  50%
After 2 years of employment    100%
3-Year Graded Vesting Percentage Vested   
Prior to 1 year of employment 0%
After 1 year of employment 33%
After 2 years of employment  67%
After 3 years of employment 100%
4-Year Graded Vesting Percentage Vested  
Prior to one year of employment 0%
After 1 year of employment 25%
After 2 year of employment 50%
After 3 year of employment 75%
After 4 year of employment 100%
5-Year Graded Vesting Percentage Vested  
Prior to one year of employment   0%
After 1 year of employment 20% 
After 2 year of employment 40%
After 3 year of employment 60%
After 4 year of employment 80%
After 5 year of employment 100%
6-Year Graded Vesting Percentage Vested 
Prior to 2 years of employment  0%
After 2 years of employment 20%
After 3 years of employment 40%
After 4 years of employment 60%
After 5 years of employment 80%
After 6 years of employment 100%

You can use your vested percentage from the chart above and multiply by your employer contributions to calculate your vested balance. Your total amount vested can also be found in your Quarterly statement within your Participant Dashboard. See this article to learn more about what happens to your non-vested account balance if you leave your company.




 

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