A workplace retirement plan can be one of your biggest financial assets—so it’s worth understanding the basics: what kind of plan you have, how you earn benefits, what documents you should review, and what to do if something looks wrong.
1) Know what type of plan you have
Most workplace retirement plans fall into two broad categories:
- Defined benefit plans: promise a future benefit amount (often based on factors like pay and years of service).
- Defined contribution plans: build value through contributions (yours and sometimes your employer’s) plus investment gains/losses, minus fees.
Action step: Ask HR or the plan administrator what plan type you have and request the plan’s main summary booklet (often called the Summary Plan Description).
2) Understand how you earn benefits
Vesting
“Vesting” means how much of the employer’s contributions you’re entitled to keep if you leave the job.
- You’re always 100% vested in your own contributions (and their earnings).
- Employer contributions may vest over time, depending on the plan’s schedule. Some plan types require immediate vesting in certain employer contributions (for example, some SIMPLE and safe harbor designs).
If the plan is terminated
If a retirement plan is terminated, employees generally must become 100% vested in accrued benefits at termination (and in many partial termination situations, affected employees must also become fully vested to the extent the plan is funded).
3) The key plan information you should review regularly
The most useful habit is to periodically review plan info so mistakes don’t sit for years unnoticed.
Documents and notices to keep an eye on
- Summary Plan Description (SPD): the plain-language guide explaining how the plan works and what benefits it provides.
- Account statements (for defined contribution plans): confirm contributions and balances look correct and arrive on schedule.
- Any change notices: plans can change going forward, but they generally can’t reduce benefits you’ve already earned/accrued.
Watch for common red flags
- Your account statements are late or inconsistent
- Your balance looks wrong
- Your paycheck contributions aren’t reaching the plan promptly
- You never received the SPD
- Your benefit is calculated incorrectly
4) How you can receive benefits
Retirement plans often allow more than one way to take benefits, depending on plan type and your situation (for example, retirement, job change, disability, or death). What’s available—and when—depends on the plan rules, so your SPD is the best starting point.
If you leave an employer, your options may include keeping money in the plan (if allowed), rolling it over, or taking distributions—each with different tax and long-term consequences (so it’s worth reading plan rules carefully before choosing).
5) Know who’s responsible—and what your rights are
Fiduciary duties (the people running the plan)
Those managing the plan and its investments have legal responsibilities to act prudently and in the interest of participants.
Your rights if there’s a problem
Start by reviewing your SPD and contacting the plan administrator/employer to request an explanation or correction.
If needed, there are formal claims and appeals processes, and in certain situations you may have the right to sue to enforce your rights under the plan and federal law.
Also, employers are prohibited from retaliating against employees for exercising plan-related rights or providing information in an inquiry.
6) Big life events that can affect your plan
Divorce and retirement accounts (QDRO basics)
A court can award part or all of a participant’s retirement benefit to a spouse/former spouse/child/dependent via a domestic relations order, and for many plans this must meet specific requirements to be a Qualified Domestic Relations Order (QDRO). Required elements can include names/addresses, plan name, the amount or method, and the time period/number of payments.
If divorce is on the table, this is something to coordinate with the plan administrator and legal counsel.
Plan termination and PBGC
If a private-sector defined benefit plan is terminated without enough money to pay promised benefits, a federal insurance program (PBGC) generally guarantees vested benefits up to legal limits. Defined contribution plans are not guaranteed by PBGC.
Quick checklist: a 15-minute retirement plan “health check”
- Confirm what type of plan you have (defined benefit vs. defined contribution).
- Find and save your SPD.
- Compare your paystub contributions to your plan statement deposits.
- Check your vesting status for employer contributions.
- If anything looks off, contact the plan administrator and document the conversation.