Your employer offers a 401(k) match. That is real compensation. Whether you get to keep it if you leave depends on a schedule most people never read.
One thing is never in doubt: money you contributed yourself is always 100% yours, immediately, in every plan. Vesting applies only to the employer's contributions.
The three kinds of schedule
- Immediate. The match is yours the moment it lands. The best case, and increasingly common.
- Cliff. You get nothing until a set date, then 100% at once. Leaving one day before a three year cliff forfeits the entire match.
- Graded. Ownership increases in steps over several years, as in the chart above.
Worth knowing before you resign: if you are close to a cliff or the next graded step, the difference between leaving in March and leaving in June can be thousands of dollars. Check your vesting date before you give notice.
Where to find yours
It is in the Summary Plan Description, which your employer must provide, and usually visible in your 401(k) provider's dashboard as a vested balance alongside your total balance. If those two numbers differ, the gap is unvested employer money.
What vesting should not change
Do not let a vesting schedule talk you out of contributing. Your own money is always yours, it grows tax-advantaged either way, and even a partially vested match is free money you would not otherwise have. Contribute at least enough to capture the full match regardless of the schedule.
The short version
- Your contributions are always fully yours. Vesting affects only the match.
- Cliff schedules are all or nothing on a specific date.
- Check your vested balance before resigning.
- Always contribute enough to get the full match anyway.
Common questions
Do I lose my own 401(k) contributions if I leave early?
Never. Your own contributions and their growth are always fully yours. Vesting applies only to employer contributions.
What is a typical vesting schedule?
Immediate vesting is increasingly common. Where a schedule exists, graded over three to five years or a cliff at around three years are both typical.
Should I delay quitting to become vested?
If you are close to a cliff or the next step, the maths can be significant. Check your vested balance and your plan's schedule before deciding.