what is fully vested 
being fully vested means a person has rights to the full amount of some benefit most commonly employee benefits such as stock options profit sharing or retirement benefits benefits that must be fully vested benefits often accrue to employees each year but they only become the employee s property according to a vesting schedule vesting may occur on a gradual schedule such as 25 per year or on a cliff schedule where 100 of benefits vest at a set time such as four years after the award date fully vested may be compared with partially vested understanding fully vestedto be fully vested an employee must meet a threshold as set by the employer this most common threshold is employment longevity with benefits released based on the amount of time the employee has been with the business while employee contributed funds to an investment vehicle such as a 401 k remain the property of the employee even if that employee leaves the business company contributed funds may not become the employee s property until a certain amount of time has elapsed an employee is considered fully vested when any and all agreed upon requirements the company has set forth to become the full owner of the associated benefit have been met thus when an employee becomes fully vested they become the official owner of all of the funds within their 401 k account regardless of whether the employee or the employer contributed them instituting a vesting scheduleto institute a vesting schedule the employee must agree to the conditions set forth often this requirement can be considered a condition of receiving the benefit if an employee chooses not to accept the vesting schedule they would surrender the rights to participate in employer sponsored retirement benefits until choosing to agree in those cases employees may have the option of investing for retirement independently such as through an individual retirement account ira instead business benefits of vesting scheduleswith vesting schedules companies seek to retain talent by providing lucrative benefits contingent upon the employees continued employment at the firm throughout the vesting period an employee who leaves employment often loses all benefits that have not yet vested at the time of departure this type of incentive can be done on such a scale that an employee stands to lose tens of thousands of dollars by switching employers this strategy can backfire when it promotes the retention of disgruntled employees who may hurt morale and do the minimum required until it is possible to collect previously un vested benefits the most commonly used vesting schedule is graded or graduated vesting which requires an employee to have worked for a certain number of years in order to be 100 vested in the employer funded benefits each year worked more money vests this schedule of vesting differs from cliff vesting in which employees become immediately 100 vested following an initial period of service and immediate vesting in which contributions are owned by the employee as soon as they start the job 