(redirected from Vested right)
Also found in: Dictionary, Legal.


Nonforfeitable ownership (or partial ownership) by an employee of the retirement account balances or benefits contributed on the employees behalf by an employer. The Tax Reform Act of 1986 established minimum vesting rights for employees based on their years of service—full vesting in five years or 20% vesting per year starting by the end of the third year.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


The process by which an employee with a qualified retirement plan and/or stock option becomes entitled to the benefits of ownership, even if he/she no longer works at the company providing the retirement plan or stock option. Vesting occurs after an employee has worked at the company for a certain number of years; once vesting occurs, the benefits of the plan or stock option cannot be revoked.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


If you are part of an employer pension plan or participate in an employer sponsored retirement plan, such as a 401(k), you become fully vested -- or entitled to the contributions your employer has made to the plan, including matching and discretionary contributions -- after a certain period of service with the employer.

Qualified plans must use one of the standards set by the federal government to determine that period.

If you become entitled to full benefits gradually over several years, the process is called graded vesting. But if you have are entitled only when the full waiting period is up, the process is called cliff vesting. If you leave your job before becoming fully vested, you forfeit all or part of your employer-paid benefits.

However, you are always entitled to all the contributions you make to a retirement plan yourself through salary reduction or after-tax payments.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Generally, only retroactive modifications affecting already vested rights violate the Contracts Clause.
vested right (which will withstand a later zoning regulation) in a
In local land-use planning, the concept of a vested right emerges somewhere along a continuum between policies that simply encourage reliance and those that, perhaps more philosophically but no less pragmatically, pursue the integrity of individual right in "property." In Virginia, the land-use statute makes clear that local jurisdictions may not deprive landowners of their vested rights.(361) In determining whether a vested right exists, reliance theory involves a fact-specific inquiry.
Yard-Man, Inc.,(30) several courts have inferred that promised retiree health benefits are a vested right to which workers are entitled.
The judge observed that 'none of the members of these categories have a vested right to obtain land in a non-transparent manner.
'The continued possession and considerable investment of private claimants do not automatically give them a vested right in Boracay.
They argued that they had a vested right, pursuant to the declaration and bylaws, to elect a majority of the board and that no law could impair those vested rights.
The zoning ordinance adopted in February emphasizes, however, that no nonconforming property has a vested right to continue its current use.
"The health of our citizens cannot be measured by any cost and treatment anywhere is a vested right for them," he said.
Federal Service Tribunal in its decision dated 02.12.2011 had inter-alia observed that "Promotion and seniority are definitely not vested rights. Sections-8 and 9 of the Civil Servants Act, 1973 read together with section 4(1) proviso (b) of the Service Tribunals Act, 1973 are very clear on that However, to be considered for promotion and seniority is a vested right.