Definition of Vesting

Vesting is the process by which an employer’s contributions to an employees retirement account become the property of the employee.

Applying "Vesting" to Securities Exams:

Many employers will make contributions to their employee’s retirement accounts as a way to further compensate their employees. Most employers will retain the ownership of their contributions for a period of time to ensure that employees who are only with the company for a short period of time do not simply take the employer’s contributions when they leave. Employers will in accordance with ERISA lay out the process and time frame as to how and when the employer’s contributions become the property of the employee.

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