Monday.com Employees Need Clear 401(k) Match and Vesting Rules

Why the match can be smaller than it looks

A 401(k) match is not always money you can count on right away. Your own paycheck contributions are always 100% vested, but employer money can come with a waiting period, a cliff, or a graded schedule that decides whether you keep it if you leave early.

That distinction matters at monday.com, a publicly traded Israeli software company with principal executive offices in Tel Aviv and more than 250,000 customers worldwide. In a company this scale, a 401(k) is not a side perk. It is part of the real pay package for engineers, product managers, and sales professionals who need to know whether the match is a promise or a delayed benefit.

What ERISA requires companies to tell you

The federal rulebook here is ERISA, the Employee Retirement Income Security Act of 1974. Most of its provisions took effect for plan years beginning on or after January 1, 1975, and its job is not to force employers to offer retirement plans at all. Instead, it sets minimum standards for the plans companies do offer, including participation, vesting, funding, fiduciary conduct, benefit accrual, grievance procedures, and participant rights.

That is the first reality check for anyone reading a benefits brochure at face value. The brochure may be polished, but the plan document and the summary plan description are where the actual rules live. The U.S. Department of Labor says administrators must provide the summary plan description free of charge, and it has to explain when employees can participate, how benefits are calculated, when benefits become vested, how they are paid, and how to file a claim.

If the plan changes, participants must be told through a revised summary plan description or a summary of material modifications. Participants also automatically receive a summary annual report each year. Those documents are not paperwork clutter. They are the place to verify whether the match is immediate, delayed, or partly forfeitable.

Vesting is the part that decides whether the money is really yours

This is the most confusing and highest-stakes part of the 401(k) match. The IRS says qualified defined contribution plans, including 401(k)s, can use vesting schedules set by the plan document. Those schedules can range from immediate vesting to full vesting after three years of service, and years of service are generally measured as 1,000 hours worked over 12 months.

In plain English, your own contributions are yours. The company match may not be. If you leave before you are vested, the unvested employer money can be forfeited, and the IRS says that can happen when workers terminate employment or fail to work enough hours over a five-year period.

Federal law tightened the rules for newer employer contributions after the Pension Protection Act of 2006, signed on August 17, 2006. For employer contributions made after December 31, 2006, plans generally must use either a three-year cliff schedule or a six-year graded schedule.

Here is what that means in practice:

• Under a three-year cliff schedule, you are 0% vested before year 3 and 100% vested at year 3.
• Under a six-year graded schedule, your vested percentage rises over time until you reach 100% at year 6.
• If your plan uses immediate vesting for employer contributions, the match becomes yours as soon as it is contributed.

For anyone thinking about a job change, a relocation, or an internal move, this is the part to check before making a decision. A match that looks large on paper can shrink fast if you leave before the vesting date.

Why the monday.com setup deserves a close read

monday.com Ltd. is not a small private shop where benefits are improvised at the edges. It is a public company that filed its 2024 Annual Report on Form 20-F for the fiscal year ended December 31, 2024, and it operates from 6 Yitzhak Sadeh Street in Tel Aviv, 6777506 Israel. It also says it has more than 250,000 customers worldwide, which is the kind of scale that makes benefits administration a live operational issue, not a back-office detail.

That matters because the company is also hiring for a U.S. benefits role that explicitly mentions 401(k) and annual open enrollment. To employees, that is a signal that the retirement program is active enough to need focused ownership. To managers, it is a reminder that benefits should be explained clearly, not marketed loosely.

For a company built around software workflows, the parallel is hard to miss. If monday.com can make work visible for customers, it should be equally clear about the work of compensation and retirement. A benefit that is technically generous but practically confusing does not build trust. It creates avoidable surprises at the exact moment people are trying to decide whether to stay.

The top-heavy wrinkle that can change the math

There is one more rule employees rarely hear about until it matters. A defined contribution plan is top-heavy when key employees hold more than 60% of the plan’s aggregate account value. If that happens, the plan generally must provide at least a 3% contribution for non-key employees and satisfy minimum vesting rules.

That means a 401(k) match can be shaped not only by the company’s usual plan design, but also by whether the plan becomes top-heavy in a given year. For employees, that is another reason to read the summary plan description instead of relying on a recruiter’s shorthand or a vague benefits slide. For managers, it is a reason to stop saying “our match is generous” unless you can explain when that money actually belongs to the employee.

How to audit your own plan before you make a move

The safest habit is simple: read the summary plan description before you assume anything. If you work at monday.com or are considering joining, check whether employer contributions vest on a cliff or graded schedule, how years of service are counted, and what happens if you leave before full vesting.

A quick audit should answer these questions:

• Are my elective deferrals immediately vested?
• Does the company match vest immediately, or does it require years of service?
• Is the plan using a three-year cliff or six-year graded schedule?
• What counts as service for vesting, and how are 1,000-hour periods measured?
• What happens to unvested amounts if I leave or do not work enough hours?

Those answers are not just about retirement math. They shape whether a compensation package is real, how credible a manager sounds when discussing total pay, and whether an employee can make a clean decision about staying, leaving, or negotiating. At a company like monday.com, where growth is visible and the workforce is global, the clearest benefits policies are part of good operations, not a nice-to-have.