Vesting
Vesting determines when you permanently own your pension benefit. Before you are vested, you could forfeit employer-funded benefits if you leave. ERISA offers two schedules for private plans: cliff vesting (0% until year 5, then 100%) or graded vesting (20% at year 3, increasing 20%/year to 100% at year 7). Your own contributions to a public pension are always immediately vested. Once vested, you can leave the employer and still collect your pension at the plan's retirement age.
Example
Under cliff vesting, an employee who leaves after 4 years and 11 months receives nothing from the employer's pension. One month later at exactly 5 years, they would own 100% of their accrued benefit.
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Contractor vs Employee Compensation
Contractors typically need to charge 40-70% more per hour than the equivalent employee hourly rate to achieve comparable take-home pay, because they cover self-employment tax (15.3%), health insurance, retirement, PTO, and business expenses themselves.
Employee Salary Equivalent
An employee salary that matches your contractor income is typically 25-40% lower than your contractor gross, because the employer covers half of FICA taxes, provides benefits, and gives paid time off that you currently fund yourself.
Health Insurance Cost Estimation
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