Vesting
InvestingThe process of earning the right to employer-contributed benefits like 401(k) matching over a set period of employment.
Example
Example: Your employer matches 4% of your salary in your 401(k), but the match vests over 4 years: 25% per year. After year 1, you own 25% of the match. If you leave after 2 years, you keep 50%. After 4 years, 100% is yours permanently. On a $80,000 salary with 4% match ($3,200/year), leaving at year 2 means forfeiting $4,800 in unvested match money.