How does a pension work if you quit?

When you leave your job before becoming fully vested in the pension plan, you might lose part of your pension, and in some cases, all of your accrued benefits. The specific amount will depend on the particular pension plan you have with your current employer.

• Fully vested in your pension plan

When you are fully vested in your pension plan, you might be able to receive a portion or percentage of your accrued benefits, even if you leave your job before retirement age. The exact amount you can receive will once again depend on your pension plan and the funds accrued.

• Defined contribution plans

When you have a defined pension plan and make contributions, such as a 401(k), you will likely be able to take your contributions with you after you leave your current job. It is important to note that any employer-related contributions might be subject to a vesting schedule and may be lost if you haven't adhered to specific requirements in your plan.

• Defined benefit plan

If you have a defined benefit plan, such as a conventional pension, you are typically not able to take your contributions with you after you leave your current job. You then must wait until you are legally eligible to receive the funds in your pension, and legal status usually applies to the retirement age.

• Cashing out

In certain scenarios, you might be able to cash out your pension funds once you leave your job. However, this case usually involves significant tax penalties and is not encouraged.