ExpertGlossary

If you are part of an employer pension plan or participate in an employer sponsored retirement plan, such as a 401(k), you become fully vested - or entitled to the contributions your employer has made to the plan, including matching and discretionary contributions - after a certain period of service with the employer.

Qualified plans must use one of the standards set by the federal government to determine that period.

If you become entitled to full benefits gradually over several years, the process is called graded vesting. But if you have a right only when the full waiting period is up, the process is called cliff vesting. If you leave your job before becoming fully vested, you forfeit all or part of your employer-paid benefits.

However, you are always entitled to all the contributions you make to retirement plan yourself through salary reduction or additional payments.