Vested Benefits

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Vested Benefits

Benefits from a pension or other retirement account that belong to the employee and that he/she keeps regardless of his/her future employment with the company offering the pension. While different companies have different rules as to the number of years at which benefits vest, the time period is usually five years. If an employee quits before five years (or before the set time period), he/she loses the benefits that he/she has accrued up to that point. If the employee quits after the benefits vest, he/she may keep them.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

vested benefits

Pension benefits that belong to an employee independent of his or her future employment. An employee usually becomes vested after five years of employment with the same firm, although there are numerous exceptions requiring longer employment. Compare pension plan.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Vested Benefits

Pension benefits owned by the taxpayer.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
Until fairly recently, a retirement plan that reported a terminated participant with a deferred vested benefit was not required to later report to the Social Security Administration when that person's benefit was paid to him or her (or his heirs), and many plans did not voluntarily do so --so those plan sponsors now have to deal with inquiries from long ago employees or their heirs.
Approximately 4,000 employees trader the age of 59 each received about 15 percent of the value of their vested benefit. The plan completely defaulted on its obligations to the 2,900 workers under the age of 45.
Here, the consequences will depend upon the terms of the plan but usually will involve splitting the CASD SERP, where the executive receives a policy equal to their vested benefit and the credit union gets a policy for the rest.
Additionally, the inflation-adjusted $9 per $1,000 of unfunded vested benefit variable-rate premium will be increased by $4 in 2014 and by $5 in 2015.
The Tax Court recently required an employee who was considered highly compensated under IRC Section 414(q) to include in his gross income the entire amount of his vested benefit in an employee stock ownership plan ("ESOP") that was retroactively disqualified.
The federal circuit courts are currently considering whether recovery for fiduciary breaches in cases where a participant has already taken a lump-sum distribution of his defined contribution plan can be considered a "vested benefit" as defined in Firestone.
Furthermore, the court stated, once an employer or plan sponsor grants vested rights under a welfare benefit plan, it may not retroactively amend the plan to deprive a beneficiary of a vested benefit.
For example, if the plan provides for a lump-sum payment of the vested benefit on separation from service that vests only after 10 years of service, it is not a violation of section 409A if the vesting requirement is reduced to 5 years of service--even if the participant becomes vested as a result and qualifies for a payment upon separation from service.
Because so many teachers burn out or make career or family changes after extensive periods of public service, the professional association representing them concluded that a defined contribution system would offer a valuable alternative to those that could not be assured of a vested benefit in a traditional DB plan that offered no inflation indexing.
In measuring vested benefit for purposes of this provision, the statutory valuation rate is 80 percent of the annual yield on 30-year Treasury securities for the month preceding the month in which the plan year begins [ERISA Section 4006(a) (3) (E) (iii) (III)].
The premium is a flat rate is $30 annually per participant; (10) however, an additional annual premium may be required, depending on the amount of the plan's unfunded vested benefit. (11) If the plan is terminated by the employer, PBGC termination procedures must be followed.
Currently all 1,300 employees in the company's Vested Benefit division work on the eDarts platform, which gives them one defined way to process a particular case.