Vested Interest

A vested interest is a right or benefit that an employee has in an employer-sponsored retirement plan. Vesting refers to the process by which an employee's right to the employer's contributions to the plan becomes nonforfeitable.

There are two types of vesting:

* **Immediate vesting:** An employee's right to the employer's contributions to the plan becomes nonforfeitable as soon as they are made.
* **Graduated vesting:** An employee's right to the employer's contributions to the plan becomes nonforfeitable over a period of time, usually five years.

The vesting schedule for a plan is set by the employer. Employees should be aware of the vesting schedule for their plan so that they know when they will have a nonforfeitable right to the employer's contributions.

There are a few exceptions to the general rule of vesting. For example, if an employee leaves their job before they have a nonforfeitable right to the employer's contributions, they may be able to withdraw their own contributions to the plan. However, they may not be able to withdraw the employer's contributions.

It is important to understand the vesting rules for your employer-sponsored retirement plan. By doing so, you can make sure that you are taking full advantage of the benefits that the plan offers.