When Are You Fully Vested in Your ERISA Retirement Benefits?
You work hard for decades to save for the future, including retirement. You may work to contribute to an employer-sponsored retirement plan or to ensure you have a solid pension before retirement age. The last thing you want or expect is to be denied the benefits you worked so hard to earn. Yet this happens all too often. Employers and their retirement plan administrators will deny your claim for benefits for any number of reasons, including both legitimate and improper reasons.
McKennon Law Group PC can help you with your ERISA pension claim. We will fight to recover the ERISA benefits to which you are legally entitled. The knowledgeable and experienced attorneys at McKennon Law Group PC know how to aggressively seek recovery of your retirement benefits, as well as life insurance, health insurance and disability insurance benefits, so that they are paid. We stand up for you against insurance companies that are denying your insurance claims and against ERISA plan administrators who deny your retirement benefits.
Unfortunately, it is not always apparent to you when your situation involves issues that a lawyer can help with. Learn more about your rights under ERISA below so you can recognize when it is time to reach out to McKennon Law Group PC.
What Is ERISA?
ERISA is the Employee Retirement Income Security Act of 1974, the federal statute that provides standards for plans and employers that provide employee benefits such as pension and retirement plan benefits as well as disability, life, health and accidental death insurance benefits. ERISA does not require employers to provide these plans, but any employer that does provide such a plan must follow the minimum requirements as stated in ERISA.
What Does Vested Retirement Benefits Mean?
To say that you are fully vested in retirement benefits means that you are entitled to those benefits and that they cannot be taken away from you. If you are partially vested, you are entitled to a portion of the benefits that are vested. Benefits typically vest over time while working for your employer.
ERISA and ERISA retirement plans control how long and under what circumstances retirement plan benefits fully vest for participating employees.
Vesting for ERISA Benefits
An important ERISA rule is that you are immediately fully vested in your contributions to a retirement plan. Your employer may not withhold pay to put it into your retirement plan only to then keep you from accessing that money.
However, specific rules and ERISA plan terms dictate how you can access your contributions in each type of retirement plan. It is not as simple as withdrawing money like you do from your bank account. Because most pre-tax contributions are not taxed, you will likely owe taxes on any money you withdraw from the plan. The IRS may also impose withdrawal penalties if you take out money before you reach retirement age.
You may be able to borrow from your retirement savings account in some cases. Check with your plan provider or employer’s benefits office to find out what types of loans they allow. For example, some plans allow loans for buying a home or funding college expenses, which you may repay via an installment plan, with interest paid to your retirement account.
Your employer also may contribute to your retirement plan. For instance, employers that offer 401(k) plans may match contributions up to a limit. You might contribute 5 percent of your salary to the plan, and your employer contributes 3 percent.
It is important to understand that when your company provides retirement benefits, you are not necessarily immediately vested in those benefits, and you likely will not have an immediate right to them.
Depending on the plan and how your employer funds and provides benefits, it may take years to become fully vested. However, ERISA provides limits on how many years vesting can take, which keep employers or plans from making it impossible to become fully vested. ERISA also requires that you start vesting within a certain time, which varies depending on the plan schedule. For example, you may be 20 percent vested after two years of service, then your vesting increases gradually over a six-year period until you are fully vested. If you quit the job when you are 60 percent vested, you will be entitled to all of the benefits from your own contributions and 60 percent of the benefits from your employer’s contributions.
What To Do if Your ERISA Benefits Claim is Denied
It is illegal for your employer or plan to withhold ERISA benefits to which you are entitled. If you believe you are partially or fully vested in benefits and your employer or retirement plan administrator is not allowing you to access them, first contact your plan administrator. Sometimes, these issues are caused by administrative errors and may be easily resolved through simple communication. However, if you have communicated with the plan administrator and still are being denied access to your benefits, it is time to reach out to the team of knowledgeable attorneys at McKennon Law Group PC at 800-682-4137. The experienced lawyers at McKennon Law Group PC will fight for you and recover your ERISA pension benefits.