5 Biggest 401(k) Mistakes to Avoid

4. Leaving Before Vesting in Employer Contributions

For employees who participate in 401(k) plans, matching contributions can be a good way to boost your retirement savings. However, employees must know that the employer’s matching contribution usually doesn’t become fully yours right away. Vesting is the legal process through which your entitlement to your employer’s contributions is established. Some employers practice immediate vesting, ensuring you own your entire 401(k) balance instantly. However, most 401(k) plans gradually allow vesting employer contributions over time. Leaving a job before vesting may forfeit some or all of the employer contributions that haven’t vested.