What Is A Vested Balance? Definition, Types, Withdrawal & Full Details (2023)

Vested Balance is your personal amount deposited by you which belongs only to you and this amount is a significant part of your income.

If you still do not understand what this amount is then you are requested to read this blog post carefully to understand the basics of your pesonal balance as there is no better time than now.

Vested Balance Definition, Types, Withdrawal & Full Details

Vested Balance Meaning

Vested balance is that significant amount which is yours and only yours and over which you have complete control.

For example, let’s assume that you work in a company and if for some reason you have to leave your job, then in that case this amount is always yours to take with you.

When you leave the company, you should know that when you do a job, some amount from your salary and some amount from the company is deposited in your provident fund account.

And you have your employer paying for you under an employer-sponsored retirement plan when you quit.

While working in the company, the schedule itself is called “Vesting Schedule”, under which you work in the company according to the employer.

This schedule is such that it is good for you as well as good for your employer.

This is because a vesting schedule assures that the employee will continue to work for the employer for a specified period of time, which is decided in advance and that too on a vesting schedule.

If you quit your job, then this amount is given to you after you leave the job, because this amount remains yours and you have full right to take it.

Can I Withdraw My Vested Balance?

As long as you keep working in the company or in any government office, during that tenure you keep contributing some amount or the other.

In this contribution, one part is yours and the other part is of the company or the government.

If you contribute, then it must be running in your mind that after all it is your money, then you can withdraw this amount whenever you want, but it happens.

To withdraw the wasted money, you have to follow some rules and policies. And even if you leave the job, you will have to wait for a few months.

Because the vesting percentage depends only on the vesting schedule and you can get it only after you have completed your tenure as per the wish of the employer.

Because all the funds deposited in your account are not contributed by you only, but also by your employer and such balance is known as “Unvested Balance”.

What Are The Types Of Vesting?

There are many types of vesting which can be the vesting schedule depending on the plan.

And this balance also depends on your given schedule, how quickly you invest this balance in how much time.

In this post, I try to understand you in detail about the two main types of vesting:

1. Cliff Vesting

Cliff vesting balances are those balances that are made available to you only after a certain period of time or after completion of the vesting schedule.

This type of vesting gives you the advantage that in this you get 100% of the entire amount at one go.

And the second special thing in this is that there is no sequence of any kind in it.

Let us tell you that this type of vesting has a vesting schedule which lasts for about three years.

Moreover, as soon as this three-year period (the plan can be more or less than three years) is completed, your balance is made available to you in one go.

2. Graded Vesting

Graded vesting is almost similar to cliff vesting, but the time period is different. And the amount of this vesting is not released simultaneously.

But if you want, a certain part of the entire amount invested under this scheme is released after a certain period, which is usually after one year.

This type of vesting usually has a vesting schedule that ranges from two years to six years.

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