Vesting is the process by which the rights to an asset pass to a recipient. The concept is most commonly used in reference to a pension plan, where an employee gains the right to future payments from the plan. For example, an employer offers 100% vesting in the employer matching of any employee payments made into a 401(k) retirement plan, but only after the employee has worked for the company for five years. In this example, five years is the vesting period.

Related Courses

Human Resources Management