Document Type

Article

Publication Date

Spring 3-30-2026

Abstract

The American employee’s efforts to accumulate retirement wealth have been stunted by 401(k) plan vesting schedules for over half a century, yet vesting schedules continue to be legally permissible and pervasively used. Empirical research now exists to show the astronomical number of American workers that annually lose their employer contributions due to vesting schedules—over 1.8 million across 909 plans in 2022 alone. The same research also reveals that in 2022, workers forfeited over $1.5 billion in retirement savings. Critically, employers recycled over 82% of these funds, directly reducing their own contribution obligations. Many private-sector employees in the United States rely on 401(k) plans to accumulate retirement wealth. This new research provides evidence that the current laws governing 401(k) plans flout retirement policy and are putting millions of Americans’ retirement security at risk. While the United States has made recent strides in improving our retirement system, one crucial area remains neglected: vesting schedules. This Article spearheads the movement to eliminate vesting schedules from 401(k) plans. It builds its case by analyzing the policy implications of such schedules and utilizing examples of corporate villains to reinforce why such a change is necessary. The Article demonstrates that the continued use of vesting schedules broadly hinders nearly all segments of society, while disproportionately burdening women, individuals in lower socio-economic positions, people of color, entrepreneurs, and those experiencing pre-retirement emergencies such as domestic violence, terminal illness, and natural disasters.

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