Under ERISA, an employee's own salary-deferral contributions to a 401(k) plan must vest:

Explanation

ERISA §203 (29 U.S.C. §1053) and IRC §411 require that an employee's own elective salary-deferral contributions to a qualified plan be 100% vested immediately — the employee always owns 100% of what they contributed from their own paycheck. Only EMPLOYER matching or profit-sharing contributions may be subject to a vesting schedule (3-year cliff or 2-to-6-year graded vesting under §411(a)(2)). The 3-year cliff schedule and the 6-year graded schedule both describe permissible EMPLOYER-contribution vesting schedules, not the employee's own deferrals. The 5-years-of-service response is not a standard schedule under current law (the 5-year cliff was raised to 3-year cliff for matching contributions by PPA 2006). The principle: 'your money vests instantly; your employer's match may take time.'