vesting investment & finance definition

The right that an employee has to receive contributions made by their employers to an employer-contributed pension plan, a 401(k) plan, or a profit-sharing plan. The federal government requires that employees must be fully vested, or be given the right, to own all of their employer’s contributions after a certain time period. Usually vesting rights are given on a graduated schedule, with 20 percent of the contribution being vested each year.