Ryan Ermey at CNBC wrote about his own 401(k) match fully vesting on his sixth work anniversary, and asked me why a vesting schedule is worth understanding long before you think about leaving a job.
My starting point: an unvested match isn't a bonus you've earned yet. Depending on the plan, a portion or all of the employer contributions can be forfeited if you leave before the schedule completes. That makes the calendar part of the compensation. One extra month can be the difference between forfeiting everything and keeping it all.
I told Ryan about a client who received a generous outside offer three months before her cliff date. The offer looked better on paper. It was not better once we counted the 100% of the match she would have forfeited by leaving early. In her case, it became immediately apparent that she should stick around. Sometimes the answer goes the other way and the new job still wins, but you would be wise to know the stakes of that decision as early as possible, not the week you resign.
Practical step: pull your plan's vesting schedule now, note the dates, and put them somewhere you will see them before any job conversation starts.
Read the full article at CNBC →
