What Is Vesting and Why Does It Matter?

Vesting refers to your ownership of the money your employer contributes to your 401(k). While your own contributions are always 100% yours, employer contributions may be subject to a vesting schedule.

• Cliff Vesting: You get 0% ownership until you hit a certain number of years, then become 100% vested all at once.

  • Example: 0% vested until 3 years of service, then fully vested.

• Graded Vesting: You gradually earn ownership over several years.

  • Example: 20% vested after 2 years, increasing by 20% each year until fully vested at year 6.

If you leave your employer before you're fully vested, you may forfeit a portion of the employer contributions in your account.

• Review your most recent statement or log into your online account

• Look for a “vesting schedule” in your plan's Summary Plan Description or contact NestEggs for more information