Most military officers quickly learn about vesting after they leave the military. In case you haven’t, vesting is when your retirement benefits become yours. Specifically, in the case of matching contributions, it is when your employer contributions and the earnings on them become yours.
In many 401(k) plans, vesting occurs at the 3-year point. So, if you leave your company after the funds vest, 3 years in this case, you can take them with you.
So, if you passed the vesting threshold you can look for a new position with no concerns about your 401(k) balance. Not so fast, Sparky…
Your funds vest only after they’ve been contributed and not all companies match on a monthly basis. In fact, more than a few wait until the end of the year to make matching contributions. If you depart prior to the deposit being made, you’ll lose that year’s matching contributions.
If you’re one of those people that never looks at your 401(k) statement, you might want to check it out before you tender your resignation. You definitely don't want to leave before you the funds are deposited (unless the old job is really bad or the new job is really good). While it might not seem like much, if you make a couple of moves during your second career, it could literally cost you tens of thousands of dollars.
Navigating the civilian financial landscape takes time and expertise. If you're short on either, you might want to consider working with a financial planner or advisor that works routinely with retired military officers. We're here when you need us.
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