Employee Benefits & Compensation Terms
Employee benefits vocabulary covers everything in the compensation package beyond salary: workplace retirement plans and matches, equity compensation in its many forms, insurance benefits, and the tax-advantaged accounts that ride along with employment.
Benefits are real money that goes unclaimed when the language is unclear — unvested equity, unused matches, and misunderstood elections are all vocabulary failures before they’re financial ones. Each term below explains what it is, how it pays, and the deadlines and traps attached.
5 terms published
- 401(k)
A 401(k) is an employer-sponsored retirement account funded straight from your paycheck, often with matching money from your employer. For 2026 you can contribute up to $24,500, plus catch-up contributions starting at age 50, and choose between pre-tax (traditional) and after-tax (Roth) treatment.
- Disability Insurance
Disability insurance replaces part of your income if illness or injury keeps you from working. It protects the asset most working people never think to insure: their ability to earn a paycheck for the next few decades.
- Employee Stock Purchase Plan (ESPP)
An employee stock purchase plan (ESPP) lets employees buy company stock through payroll deductions at a discount, often 15% off the lower of two prices, making a well-run ESPP one of the few near-guaranteed returns in personal finance.
- Restricted Stock Units (RSU)
Restricted stock units (RSUs) are a promise from an employer to deliver company shares on a vesting schedule; their full value is taxed as ordinary income the moment they vest, exactly like a cash bonus paid in stock.
- Vesting
Vesting is the process by which promised benefits--employer 401(k) contributions, stock grants, options--become irrevocably yours over time, usually either all at once after a waiting period (cliff) or gradually (graded).
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