by KYW's Salil Gutt

Misunderstanding of a very simple financial concept is costing individuals a lot of money. The concept of a vesting schedule is little understood.

The best way to describe this is with an example. In most 401k plans employers match employee contributions, within limits. The employee's money is always available if he or she were to quit the job. The right to the employer's contribution unfortunately is phased in over time. Some companies have three years some have five.

In short, you have to be employed by the company for up to five years in order to fully avail of the employers match in the 401k plan.  This three to five year period when full control of money is transferred to the employee is called the vesting schedule.

Vesting schedules also apply to traditional pension plans.  If you are contemplating leaving your job, do a quick review whether postponing that decision by just a few months could mean a whole lot more money for you in your retirement plan.