Graduated Vesting

AAA

DEFINITION of 'Graduated Vesting'

The accelerated benefits employees receive as they increase the duration of their service to an employer. A vesting schedule is mandated by federal law for the employers' contribution portion of private retirement plans. It specifies the minimum number of years a company may require employees to work in order to earn the vested right to all or part of the employer contributions.

INVESTOPEDIA EXPLAINS 'Graduated Vesting'

A graduated vesting schedule for a defined benefit plan requires an employee to have worked for a certain number of years in order to be 100% vested in the employer funded benefits. For example, an employee may have to work for seven years to become fully vested, but will be 20% vested after three years, 40% vested after four years, 60% after five years, and 80% after six years of service.

RELATED TERMS
  1. Vesting

    The process by which employees accrue non-forfeitable rights ...
  2. Accelerated Vesting

    A form of vesting that takes place at a faster rate than the ...
  3. Cliff Vesting

    The process by which employees earn the right to receive full ...
  4. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  5. Employee Retirement Income Security ...

    The Employee Retirement Income Security Act of 1974 (ERISA) protects ...
  6. Cash Bonus

    A lump sum of money awarded to an employee, either occasionally ...
Related Articles
  1. Retirement

    Pension Plans: Pain Or Pleasure?

    Employees have a love/hate relationship with this retirement option.
  2. Retirement

    Weave Your Own Retirement Safety Net

    Build savings to support yourself in case pension plans and Social Security fall through.
  3. Retirement

    Is Your Defined-Benefit Pension Plan Safe?

    Your plan may not last in a rocky market. Find out whether your savings will be affected.
  4. Retirement

    The Defined-Benefit Plan's Many Problems

    The shift in retirement plan schemes - from defined benefit plans to defined contribution plans - raises some important issues.
  5. Retirement

    Will My Pension Impact My Social Security Benefits?

    So you're eligible for a pension, and you're eligible for social security. And the question is, will that pension impact your social security benefit?
  6. Professionals

    How do fringe benefits help increase employee retention?

    Offering fringe benefits can be a valuable retention tool for employers wanting to maintain a high-quality, highly productive staff.
  7. Retirement

    Are part-time employees eligible for fringe benefits?

    Learn how offering fringe benefits allows employers to entice new talent to join their teams, although part-time workers do not often get these benefits.
  8. Retirement

    Who is exempt from paying Social Security taxes?

    Learn about the groups of people who qualify for exemption from Social Security taxes, and explore the process of applying for exemption.
  9. Retirement

    What is the difference between a fixed and variable annuity?

    Understand the difference between fixed, variable and indexed annuities, and read a brief summary of their respective risks and advantages.
  10. Personal Finance

    Do minimum wage laws make labor a fixed or variable cost?

    Find out why labor is a classified as a semi-variable cost by the minimum wage laws; labor has elements of both fixed costs and variable costs.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center