Hi All. I hope you find this website to be informative, educational and easy to understand.  I cannot stress enough how important it is for you to keep track of your retirement plans whether they are sponsored by your employer, or they are Individual Retirement Accounts (IRA) or you’re self-employed and sponsor your own qualified retirement plan.

There are far too many people who have to continue working well past their retirement age because Social Security isn’t enough and they receive little or no benefits from a retirement plan.  Do not let that happen to you.

One simple rule of thumb is to invest 10% of all your income through your working years which theoretically will create the financial freedom you will need when you retire.

My Background

Qualified retirement plans are derived from Section 401 of the Internal Revenue Code.  (eg. 401(k)).  The “qualified” refers to the fact that these plans accumulate money for you (or fund a monthly benefit) on a tax-deferred basis.  In other words, you will pay no taxes on this money until you take a distribution from the plan, generally when you reach Normal Retirement Age.


The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

Prior to the establishment of this Act, many employers would abuse the system by setting a vesting schedule that declared the plan participants not vested in their retirement benefits until they reached age 65.  Then they would fire these participants at age 64, leaving them with no vested interest in their retirement benefit.  And all the money contributed to the plan to fund these benefits would revert back to the employer.

This and other abuses were corrected by ERISA.  Minimum vesting schedules were established by this law.  Retirement plan contributions were no longer allowed to revert back to the employer.


The minimum vesting schedules allowed today are as follows:

Graded Vesting:

  • Upon Completion of one year of Credited Service……………..0%
  • Upon Completion of two years of Credited Service…………..20%
  • Upon Completion of three years of Credited Service………..40%
  • Upon Completion or four years of Credited Service………….60%
  • Upon completion of five years of Credited Service……………80%
  • Upon completion of six years of Credited Service……………100%

Cliff Vesting:

  • Upon Completion of one year of Credited Service……………….0%
  • Upon Completion of two years of Credited Service……………..0%
  • Upon completion of three years of Credited Service……….100%

A Year of Credited Service is any plan year of calendar year, whichever is used as defined in the plan, when a participant works at least 1,000 hours.

You can work 20 hours per week and hit the 1,000 hour mark in 50 weeks.

So let’s look at the various qualified retirement plans and how they are structured.



  • Ahearst says:

    Sounds like you’re a certified financial planner or a CPA or something of that nature. This information very good as I found most people are not aware of their investment options like Roth IRA. 401K plan and so on. It’s sad when they get to their retirement age, they haven’t planned anything financially that is. That’s why we see so many retirees still working as greeters at Walmart and other local business establishment to supplement their social security income.

    Good job providing the info.

    • admin says:

      Hi Ahearst,

      I was a QPA (Qualified Plan Administrator) a certification rendered by the American Society of Pension Actuaries (ASPA). I have since allowed that certification to lapse as I took my career in a different direction. But I agree that it is so important to plan ahead for one’s financial comfort at retirement, which, paradoxically, I did not do.

      Which is why I’m here…