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Your employer may use a schedule in which employees are 100 percent vested in employer contributions after 3 years of service (cliff vesting). Under graduated vesting, an employee must be at least 20 percent vested after 2 years, 40 percent after 3 years, 60 percent after 4 years, 80 percent after 5 years, and 100 percent after 6 years. If your automatic enrollment 401(k) plan requires employer contributions, you vest in those contributions after 2 years.
Date: 28 Jul 2000. Hello Danny, The most common vesting schedules I see for employee stock options are over four or five year periods. Typically there is a âcliffâ vest (20% or 25%) after the first year and then a pro-rata fraction monthly after the first year. These are only customary and are not legal requirements.