Cliff Vesting is when vesting of 401k retirement accounts occurs all at once, rather than a gradual phased out period of time. Instead of a percentage of your employer’s 401k match-up contributions being vested over a phased out period of time, the vesting will occur all at once after a certain period of time, e.g 5 years.
Compare the traditional 401k Vesting schedule with the Cliff Vesting Schedule:
Traditional 401k Vesting Schedule
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401k Vesting Guideline Schedule 1 set by ERISA
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| Years of Work Vested | Percentage of Accrued Benefits Vested |
| Less than 3 | 0% |
| Atleast 3, but not >4 | 20% |
| Atleast 4, but not >5 | 40% |
| Atleast 5, but not >6 | 60% |
| Atleast 6, but not >7 | 80% |
| Atleast 7 | 100% |
Cliff Vesting Schedule
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401k Vesting Guideline Schedule 1 set by ERISA
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| Years of Work Vested | Percentage of Accrued Benefits Vested |
| 0-6 Years | 0% |
| 7 Years | 100% |
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