What is described by 'Cliff Vesting'?

Cliff vesting is a specific term used in the context of retirement plans and employee benefits that refers to a situation where employees gain full ownership of employer contributions after a defined period of time, without any gradual buildup. Typically, if an employee does not stay with the company for that entire period, they forfeit the contributions made by the employer.

In this case, the concept of cliff vesting means that after reaching a specific duration of employment, usually dictated by the plan (often three to five years), the employee becomes entirely vested in the contributions made by the employer. Prior to that point, the employee does not have any ownership of these contributions. Therefore, the correct answer accurately captures this concept, as it highlights the transition from no ownership to full ownership after a predetermined timeframe.