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401(k) Employer Vesting 

After contributions are made, your employer may also have a vesting schedule, which means whatever money they match, this doesn't necessarily mean that you can keep all of the money in your nest egg. It depends on the plan requirements. Keep in mind this is money that wasn't allocated in your budget - this is an optional benefit by your employer.

This means that if you leave the company, you are eligible to receive what your employer matched based on the vesting guidelines:

Employer Vesting Explained

Suppose that you have three years of service and have accumulated $20,000 in your 401(k). From this amount your employer's plan states that you are eligible for 80% of what they invested. Make sure not to confuse this with the total balance in your account. Now suppose that out of the $20,000, you actually invested $12,000 and your employer matched $2,000. This brings the total to $14,000. Now over time the $12,000 accumulated to $16,000 and the employer match of $2,000 accumulated to $4,000. To determine your vested amount take the $4,000 and multiply it by 80%.


To determine the amount that you are eligible for in the above example, multiply $4,000 x .80 (three years of service) and that amount comes to $3,200.

Next take your 401(k) balance and the vested eligibilty amount to determine how much money that you will retain.   

$16,000 + $3,200 = $19,200.   

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