What is vesting?

Your employer may choose to contribute employer matching funds to your account. However, your right to these employer contributions may be subject to a vesting schedule depending on your company’s 401(k) plan. Essentially you can accrue employer contributions made to your 401(k) account along with earnings on those amounts, but vesting rules will determine the portion of the funds you are entitled to at any given time. 

Please note that you are always 100% vested in your own salary 401(k) contributions, rollover contributions from your other accounts and Safe Harbor contributions made from your employer.

With all vesting schedules, you will see employer contributions applied to your account balance as they happen, but you won’t be entitled to them until you have been with your employer for a specified period of time. Your plan’s vesting schedule is used to determine your vested percentage. 

See these articles to learn more about cliff and graded vesting schedules.

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