Graded Vesting: What Does It Mean?

Graded Vesting is a schedule where you gain ownership of your employer’s retirement plan contributions gradually over time, rather than all at once.

Unlike "cliff vesting" (where you get 0% until a specific year, then jump to 100%), graded vesting lets you keep a growing percentage of employer funds for every year you stay with the company.

Federal law sets the maximum Graded Vesting Schedule at 6-Years:

• Year 1: 0% vested (leaving early means forfeiting matching funds)

• Year 2: 20% vested

• Year 3: 40% vested

• Year 4: 60% vested

• Year 5: 80% vested

• Year 6: 100% fully vested

Many employers offer faster schedules. Check your plan’s Summary Plan Description (SPD) or ask HR for your exact timeline.