Vesting

Vesting determines how much of your employer’s contributions you actually own if you leave the company. The money you contribute yourself is always fully vested from day one. Employer contributions, including the match, often come with a vesting schedule designed to reward staying.

Two common structures exist. Cliff vesting makes all employer money yours at once after a set period, such as three years, with nothing vested before then. Graded vesting hands it over in pieces, for example 20 percent per year over five years. If you leave before you are fully vested, you forfeit the unvested portion of employer money, though never your own contributions or their growth. Checking your vesting schedule matters most when you are weighing a job change, because timing a departure a few months later can mean keeping thousands of dollars. Our retirement on-track playbook notes where vesting fits in the bigger picture.