Leave a Job Before Employer Contributions Vest

Here’s the thing. Companies don’t just want to offer ideal matching contributions to employees that have one foot out the door. For that reason (and others) they often implement a vesting period.

What this means is that you’ll have to work for a company for a certain amount of time before the contributions they made are 100% yours. If you leave before them, they get to keep the contributions they made to your 401(k) plan.

Keep in mind that there are two vesting methods. With gradual vesting, your employer contributions must vest 20% per year after your first year of employment, meaning that you will be fully vested in 6 years. It’s important to talk about when the contributions are yours to keep often, though, as some employers can vest contributions much sooner.

With cliff vesting, all employer contributions will be fully vested after three years of employment.

If you’re planning on looking for a new job, keep these periods in mind so that you won’t lose out on extra money, if possible.