Vesting

retirement

Also known as: vesting schedule, cliff vesting, graded vesting

Updated · Written and reviewed by Konstantin Iakovlev

Detailed explanation

For 401(k) employer match, ERISA caps vesting at 3-year cliff or 6-year graded for most plans (auto-enrollment plans capped at 2-year cliff). YOUR contributions are always 100% vested. Forfeiture: leaving before vesting means losing the unvested portion. RSU vesting is typically 4 years with 1-year cliff (25% at 1 year, then 1/36 monthly). Vested RSUs are taxed as ordinary income at vest based on FMV. Early-stage startups sometimes use accelerated vesting on acquisition (single-trigger) or termination after acquisition (double-trigger).

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