Definition
A vesting schedule where you earn none of an employer's contributions or equity grants until a set date, then all of it at once. It contrasts with graded vesting, which releases ownership in yearly slices. One-year cliffs are standard for startup stock options, and 401(k) plans may use a cliff of up to three years for employer contributions.
Why it matters
Leaving a job one day before a cliff can forfeit everything the employer put in. Knowing your cliff date matters when timing a resignation, negotiating a start date, or valuing an offer that leans on equity.
Example
A startup grants 4,000 options vesting over four years with a one-year cliff: nothing vests for twelve months, then 1,000 options vest at once, and the rest vest monthly. An employee who quits in month eleven walks away with zero; one who stays through month twelve keeps 1,000 options plus everything that vests afterward.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.