Vesting is the process by which you gain full ownership of employer-contributed retirement money or equity compensation (RSUs, stock options) over time. Common 401(k) vesting schedules: immediate (fully yours upon contribution), cliff (0% until year 3, then 100%), or graded (20% per year for 5 years). Equity compensation typically vests over 4 years with a 1-year cliff (25% after year one, then monthly). Leaving before vesting forfeits unvested amounts. Your own contributions are always 100% immediately vested. Understand your vesting schedule before accepting a job offer or considering departure — it can mean tens of thousands of dollars.
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401(k)
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Vesting
August 22, 2026 · Aditya Gupta
Investing
Related terms
401(k)
A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
Asset Allocation
Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
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Beta
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