When it comes to retirement benefits and pension plans, fully vested funds are funds that an employee or beneficiary can access without any conditions or restrictions in place. Typically, when employers or other contributing sources make contributions such as matching funds to a retirement plan, they will become fully vested in the beneficiaries’ account after a certain period of time, or after they have met certain predetermined criteria.

Fully vested funds are the hallmark of long-term retirement planning.They are beneficial for both employer and employee because employers minimize their contributions over the life of the retirement plan and employees have access to their own retirement funds to use at any time.

The vesting schedule, or the amount of time it takes for a beneficiary to become fully vested, will vary depending on the employer or plan. It could take a few years for the funds to fully vest, or the funds may become fully vested all at once after a certain threshold has been reached. The most common vesting topics is graded vesting, which is a schedule that offers increasing percentages of vested benefits over an allotted period of time. Other vesting schedules may include five year cliff vesting, which provides full vesting immediately if employment continues until the five-year cliff is met or immediate vesting, which allows a beneficiary to become vested in the account right away.

Fully vested funds are a secure way for employees to access their retirement plan contributions and benefit from their hard work. As employees become more financially responsible, they will be able to easily access the funds they need to pay for the retirement lifestyle they want. Likewise, employers contribute to retirement plans knowing that they are helping to provide a secure financial future for their employees.