A retirement plan participant who is vested has completed the years of service specified by the plan to earn the right to accrued benefits (under a defined-benefit plan) or account balances from employer contributions (under a defined-contribution plan). The maximum cliff vesting period under federal law is five years for defined-benefit plans and three years for the employer contributions to defined-contribution plans. Employee contributions vest immediately.


Maximum vesting periods

The maximum vesting period for employers’ contributions to 401(k) plans should be no more than one year.