What does it mean to be 100% vested in a retirement plan?

Being 100% vested in a retirement plan means that the employee has full ownership of all the funds in the account, including both their own contributions and any contributions made by the employer. When an employee is fully vested, they can take the entire balance with them if they leave the job, regardless of the length of time they have been employed. This is a critical aspect of retirement plans because it ensures that employees are entitled to the benefits that have been accrued during their employment, which fosters better long-term financial security.

Other aspects of vesting involve different timelines and conditions under which employees might claim employer contributions, but being fully vested removes any uncertainty about ownership when an employee decides to leave the organization.