Your first step to saving for retirement is to understand how your employer’s retirement plan works. Most employer-sponsored retirement plans that receive favorable tax treatment must operate under a written document. Your employer must follow all plan provisions or risk losing the plan’s tax benefits. For most plans, your employer must give you plan disclosure documents explaining eligibility, contributions, vesting and other plan provisions. Employers (for example, those with 401(k) plans) are generally required to provide you a Summary Plan Description (SPD) within 90 days of when you are becoming a plan participant. The SPD is a plain language summary of important features in your retirement plan. Similar notice and disclosure requirements also apply if your employer sponsors a SEP or SIMPLE IRA plan. Here is a brief overview of the basic concepts the plan’s disclosure documents must cover. Eligibility to participate You are eligible to participate in your employer’s retirement plan when you have met the plan’s required conditions. The law permits each plan type to have different participation requirements. Some allow you to participate immediately, while others may require that you work for a specific amount of time. Review the general eligibility requirements for the following common types of retirement plans: SEP SIMPLE IRA plan Qualified plan (for example, 401(k), profit-sharing, defined benefit) 403(b) plan For specific eligibility requirements of your plan, ask your employer or check your plan’s disclosure documents. Contributions All retirement plans allow contributions up to certain annual limits. The type of retirement plan you have determines who can contribute to it and the maximum amounts that can be contributed. Some plans allow only employer contributions, others allow only employee contributions and some may allow both. Your plan’s disclosure documents will state who can contribute to your plan. Vesting Vesting means ownership of your account or your entitlement to benefits. You are always 100% vested in any contributions that you make to your retirement plan, even if you leave your employer. However, depending on what type of retirement plan you have and the choices your employer has made about the benefits under the plan, vesting of employer contributions may be immediate or may take up to seven years. Your plan’s disclosure documents will contain the specific vesting schedule. Distributions Normally, you can only take money out of your retirement plan when you retire or leave your job, except in the case of IRA-based plans (SEPs and SIMPLE IRA plans). However, depending on the type of plan you have, it may allow distributions for specific events such as hardship or disability, or it may allow you to take a plan loan from your account. The plan’s disclosure documents will explain if and under what conditions these “in-service” distributions” are allowed. Visit the Plan Participant/Employee Web pages to find more retirement plan information.