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enrollment 401(k) plan requires employer contributions, you vest in those contributions after 2 years. Automatic
enrollment 401(k) plans with optional matching contributions follow one of the vesting schedules noted above.
Employers making other contributions to defined contribution plans, such as a 401(k) plan, also can choose between
two vesting schedules. For those contributions made since 2007, they can choose between the graduated and cliff
vesting schedules. For contributions made prior to 2007, they can choose between schedules.
You may lose some of the employer-provided benefits you have earned if you leave your job before you have worked
long enough to be vested. However, once vested, you have the right to receive the vested portion of your benefits even
if you leave your job before retirement. But even though you have the right to certain benefits, your defined
contribution plan account value could decrease after you leave your job as a result of investment performance.
Note: If you leave your company and return, you may be able to count your earlier period of employment towards the
years of service needed for vesting in the employer-provided benefits. Unless your break in service with the company
was 5 years or a time equal to the length of your pre-break employment, whichever is greater, you likely can count that
time prior to your break. Because these rules are very specific, you should read your plan document carefully if you are
contemplating a short-term break from your employer, and then discuss it with your plan administrator. If you left
employment prior to January 1, 1985, different rules apply. For more information, contact the Department of Labor
toll free at 1-866-444-3272.
For Reserve and National Guard units called to active duty, the Uniformed Services Employment and Reemployment
Rights Act (USERRA) requires that the period of military duty be counted as covered service with the employer for
eligibility, vesting, and benefit accrual purposes. Returning service members are treated as if they had been
continuously employed regardless of the type of retirement plan the employer has adopted. However, a person who is
reemployed is entitled to accrued benefits resulting from employee contributions only to the extent that he or she
actually makes the contributions to the plan.
Information Provided By the Retirement Plan
Each retirement plan is required to have a formal, written plan document that details how it operates and its
requirements. As noted previously, there is also a booklet that describes the key plan rules, called the Summary Plan
Description (SPD), which should be much easier to read and understand. The SPD also should include a summary of
any material changes to the plan or to the information required to be in the SPD. In many cases, you can start with the
SPD and then look at the plan document if you still have questions.
In addition, plans must provide you with a number of notices.
For example, defined contribution plans, such as 401(k) plans, generally are required to provide advance notice to
employees when a "blackout period" occurs. A blackout period is when a participant's right to direct investments, take
loans, or obtain distributions is suspended for a period of at least three consecutive business days. Blackout periods can
often occur when plans change recordkeepers or investment options.
Some plan information, such as the Summary Plan Description, must be provided to you automatically and without
charge at the time periods indicated below. You may request a Summary Plan Description at other times, but your
employer might charge you a copying fee. You must ask the plan if you want other information, such as a copy of the
written plan document or the plan's Form 5500 annual financial report, and you may have to pay a copying fee. Many
employers provide benefit information on a Website.