If your company matches employee 401k contribution, do you require a vesting schedule?

We are 100% vested from day one. But then again, we are government.

It's your tax dollars at work. :-)

In my experience, the employee retention factor of retirement vesting is dependent on the type of employee and the relative dollar value involved compared to salary.

A five year vesting schedule for a 2% of salary employer contribution to a 401(k) isn't going to be a retention motivator to a $120,000/year, twenty something, tech worker at a swash buckling SV firm. The relative value of the vesting seems immaterial to a younger, non-financially savvy person.

Whereas, a $75,000/year finance employee in their mid 40's would be incentivized by the tax free benefit accrued with a $2,500/year employer contribution to such a plan. They "get it" and tend to look more towards securing their future.

The company match vests in two years, ratably over the period.

Depending on the demographics of your employees (perhaps other employers in the area), the two to three year matching has become common. If it's much longer, the plan may not be perceived as a "benefit" and serve as a detractor.

We vest 25% in two years and 100% in three years. I don't believe it really impacts retention.

I agree with Patrick. Most companies have a 12 month waiting period, prior to your participation. This policy makes sense. But a vesting schedule after that point just seems to add a level of complication without benefit. The amount contributed by the company would need to be high enough to act as a retention mechanism. The usual situation is a 3% to 5% match, which will not be a deciding factor in the decision to leave, i.e. not golden handcuffs.