Can my employer take my retirement money if I’m fired?
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UPDATED: Feb 7, 2020
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If you have a retirement plan with an employer, and are then fired from the company, that employer can’t take away any money you have contributed to the retirement plan in the case of a 401(K). In the case of a pension plan where the employer is also contributing to your retirement fund, i.e. through a contribution-matching program or other clause, it’s possible that the employer is legally allowed to take back any contributions they have made to the fund. Whether or not your employer will have the ability to do this will depend on whether you are vested in the plan.
When you are “vested” in your pension plan, that means that you have the right to keep all of it, even if some of it is made up of employer contributions, and even if you lose your job. You can also be partially vested in the plan; for example, you might be 50% vested, in which case you will be able to keep 50% of the employer’s contributions.
How you become vested in your pension plan will vary depending on the rules of your specific plan and the company that operates it. It’s very common for a condition to be required in order for vesting to take place. For example, a plan might state that after ten years of work with the company, you will earn vesting in your retirement plan. In some cases, state or federal laws, such as ERISA (the Employee Retirement Income Security Act) may also apply to the vesting of pension funds.
To determine if your retirement money is at risk in the event of termination, you should check with your employer and/or the company that operates your pension plan if you have questions. You may also want to seek the help of a lawyer who can assist you in making sure your rights are protected.