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Meltdown 101: How Layoffs Affect Retirement Plans

Meltdown 101: How Layoffs Affect Retirement Plans

CANDICE CHOI, AP Personal Finance Writer

Q: Do I get retirement benefits if I’ve only been with the company a short time?

A: Companies typically have a “vesting period,” meaning you need to be employed a minimum amount of time to be entitled to certain benefits. With 401(k) plans, the requirement is often three years.

If you’re laid off before then, any matching contributions by your employer may be taken back, said Chris Mahoney, a retirement leader at Mercer, a human resources consulting firm.

If you’re not vested yet and want to know how much money could be reclaimed by your employer, check your monthly 401(k) statement. Employer contributions to date should be listed separately.

Any money you put into the account is yours, even if you haven’t reached the vesting period.

With pension plans, the vesting period can be no longer than five years, and may be less. If you aren’t vested at the time of your layoff, you’re out of luck — you don’t get anything. Though some plans vest workers in stages: For instance, workers may be 25 percent vested after two years and 50 percent vested after three years and fully vested after five years.