Definition
The process of earning full ownership of employer contributions or benefits over time, such as in a retirement plan.
What to consider
- Mark the dates when employer contributions fully belong to you.
- Use vesting milestones as motivation to stay with your job.
- Understand how vesting schedules affect your overall benefits.
Real world scenarios
- Lisa’s company contributions to her 401(k) vest fully after four years, so she stays until the vesting date to lock in those funds.
- Ed studies his vesting schedule before switching jobs, ensuring he doesn’t lose unvested employer matches.
- Startups often use cliff vesting for stock options, meaning employees must remain employed a set time to claim ownership rights.
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