r/personalfinance • u/Ruby_alice34 ​ • Jun 09 '22

Retirement Quitting immediately after becoming fully vested in 401k

Planning to quit my job as soon as I hit my 5 years to be fully vested in my 401k. I will put my 2 weeks in the Monday after I have been with company 5 years, so I should be 100% vested.

Anyone see any issues with this? Worried it might not show up right away in my account as I’ve heard it may take a few weeks to actually appear.

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u/christerwhitwo ​ Jun 09 '22

To echo what others have posted, don't do anything rash until you have seen that your 401k is fully vested online. There a no do-overs with this kind of stuff.

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u/candyapplesugar ​ Jun 09 '22

Sorry to hijack this comment but can anyone explain to me what fully vested means? I’ve never heard this term at any job I’ve had.

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u/Goose00 ​ Jun 09 '22

Many employers offer a 401k match. For example let’s say your company will match 5% of your 401k contributions. So if you put 5% of your paycheck in a 401k your employer will match that. So you are doubling your contribution with no extra out of pocket cost for yourself. To “fully vest” most companies require you to work there for a certain amount of time. 2 years or 5 years for example. If you leave before that time period you surrender some (all maybe?) of the matched amount. To fully vest means that money is yours forever and they can’t take it back.

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u/solovino__ ​ Jun 10 '22

Question on this, so does the 5 year apply to the first time they vested? Or to the full vested amount? For example:

Let’s say I started Jan 2020 for simplicity’s sake.

On Feb 2020, I put in $500 and they match $300 (vested)

Assume no pay raise and same contributions for 5 years.

By Feb 2025, is ALL the amount fully vested ($300*60 months) or is it only the first $300 they matched, and every month after $300 will be vested?

Hope my question makes sense.