Final answer:
A retirement plan where you are vested over 6 years is known as a Graded plan. In a graded vesting schedule, rights to employer-contributed funds become non-forfeitable over time, contrasted with immediate vesting in a cliff plan. Graded plans are part of defined contribution plans, such as 401(k)s.
Step-by-step explanation:
If you are gradually vested in a retirement plan over 6 years, the plan is referred to as a Graded plan. Vesting refers to the process by which an employee accrues non-forfeitable rights over employer contributions made to the employee's retirement plan account, on a gradual basis over several years. The term "graded" specifically indicates that the vesting occurs incrementally rather than all at once, which is known as "cliff vesting".
Retirement plans like 401(k)s and 403(b)s are defined contribution plans, which have largely replaced traditional pensions or defined benefits plans. These plans allow both employer and employee contributions, are tax deferred, and offer portability when an employee changes jobs. Real rates of return on the retirement plan's investments help protect retirees from the erosion of buying power due to inflation.