What does vesting signify in a financial context?

Vesting in a financial context signifies a legal right to all the money in your account, typically associated with employer-sponsored retirement plans like 401(k). When an employee is fully vested, they have the right to keep the entire balance of the account, including both their contributions and any employer contributions made to their account, regardless of whether they continue to work at the company.

Vesting often occurs on a schedule set by the employer, where employees progressively earn the right to the employer's contributions over time. Once fully vested, employees can withdraw or transfer the total funds without losing any part of it, which includes both their own contributions and any matching funds or other benefits provided by the employer. This contrasts with other options, which do not adequately describe the concept of vesting as it pertains to financial rights and ownership of funds in retirement accounts.