Vesting

Vesting is how you earn full ownership of money your employer contributes to a workplace retirement plan such as a 401(k). Money you put in from your own pay is always 100 percent yours right away. Employer money can come with a vesting schedule written into the plan. Once you are fully vested, the employer cannot take that money back.

Say an employer adds $1,000 and the plan vests 20 percent for each year you work there. After three years, $600 is yours, and if you leave, the $400 you have not yet earned stays with the plan.

Federal law limits the wait. Employer contributions to a 401(k) generally must be fully vested after three years of service as the plan counts it, or vest gradually and reach 100 percent by six years. Plans may vest faster, including immediately.