Vesting.

In plain English

Vesting is the schedule that controls when you actually own employer-provided benefits, most commonly the employer's match in your 401(k), or stock grants (RSUs, options) at startups and public companies. Until you're vested, the employer can take it back if you leave. After you're vested, it's yours regardless. Vesting comes in two main shapes: cliff (0% for a while, then 100% all at once) and graded (a percentage each year).

01Why it matters

Vesting is real money that affects when it makes sense to change jobs. Leaving 30 days before a major vesting milestone can cost you thousands of dollars. It's also why your 'total balance' on a 401(k) statement isn't the same as your 'vested balance', only the vested part is actually yours yet.

02The math, step by step

Your employer matches your 401(k) 100% up to 4% of salary, with a graded vesting schedule of 25% per year over 4 years. After year 1, you're 25% vested in the match. After year 4, you're 100% vested. If you contributed enough to capture the full $4,000/year match and leave after 2 years, you keep $2,000 of employer money (50%) plus 100% of what you contributed yourself.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT