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Related to Vesting: Vesting schedule


Nonforfeitable ownership (or partial ownership) by an employee of the retirement account balances or benefits contributed on the employees behalf by an employer. The Tax Reform Act of 1986 established minimum vesting rights for employees based on their years of service—full vesting in five years or 20% vesting per year starting by the end of the third year.


The process by which an employee with a qualified retirement plan and/or stock option becomes entitled to the benefits of ownership, even if he/she no longer works at the company providing the retirement plan or stock option. Vesting occurs after an employee has worked at the company for a certain number of years; once vesting occurs, the benefits of the plan or stock option cannot be revoked.


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 are entitled 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 a retirement plan yourself through salary reduction or after-tax payments.

References in periodicals archive ?
Those with underwater stock options are deciding whether to accelerate the vesting to avoid recognizing compensation expense.
Accordingly, once an NRA becomes a USCR, he or she must worry about the application of section 409A to vested accumulations (or ongoing vesting or funding) under pre-existing foreign deferred compensation arrangements--even if derived from services rendered outside the United States while an NRA--since the previously vested amounts were not subject to U.
The tax effect to the employee may be somewhat ameliorated by providing for vesting over time.
Delay exercise until vesting and hold or sell at that time.
Vesting schedules specify the rate at which employees earn rights to the employer contributions to a plan.
In Situations 1 and 2, (1) all of the employees covered by the converted or merged MPPP remain covered under the continuing profit-sharing plan, (2) the MPPP assets and liabilities retain their characterization under the profit-sharing plan and (3) the employees vest in the continuing profit-sharing plan under the same vesting schedule that existed under the MPPP.
Vesting schedule: 1-2 years' employment, 0%; 3+ years, 100%.
Elaborating on the foregoing, the Vesting Amendment clarifies or revises the current vesting framework as follows:
93-27 did not address the impact of the vesting of a partnership interest.
The statement presumes the service period is the vesting period, unless the stock-option plan defines some shorter period, and it contains special provisions for options with graded vesting on attributing compensation cost over the vesting period.
These filings are the first step in the process which could result in the transfer of the property's title to the city, called vesting.