Company XYZ has the following vesting schedule in place for its 401 (k) plan. Years of Service Vested Percentage

Less than 1 0%

1 25%

2 50%

3 75%

4 or more 100%

Which statement describes how Company XYZ uses vesting with employer contributions to 401 (k) plans?

A.

When employer contributions are added to a 401 (k) account, the funds are immediately owned by the employee.

B.

After working a specific amount of time for the employer, the employer contributions become the full property of the employee.

C.

Employees keep employer contributions when they move to a different job, no matter how long they have worked for the employer.

D.

Employees in managerial positions own employer-contributed funds immediately, while other employees must work for the employer a minimal period of time to own employer-contributed funds.

Question

Efrain Tapia

Business

27 April, 02:00

Company XYZ has the following vesting schedule in place for its 401 (k) plan. Years of Service Vested Percentage

Less than 1 0%

1 25%

2 50%

3 75%

4 or more 100%

Which statement describes how Company XYZ uses vesting with employer contributions to 401 (k) plans?

A.

When employer contributions are added to a 401 (k) account, the funds are immediately owned by the employee.

B.

After working a specific amount of time for the employer, the employer contributions become the full property of the employee.

C.

Employees keep employer contributions when they move to a different job, no matter how long they have worked for the employer.

D.

Employees in managerial positions own employer-contributed funds immediately, while other employees must work for the employer a minimal period of time to own employer-contributed funds.

+1

Answers (1)

Know the Answer?

Deon Cunningham · Answer 1

B.

After working a specific amount of time for the employer, the employer contributions become the full property of the employee.

Explanation:

401k is retirement savings plan where an employee chooses to contribute a portion of their salary and the employer also contributes to that account. The latter can match dollar for dollar, 50% or any percentage as stated in the employment contract. Vesting in itself means full ownership of the account balance by the employee. Based on XYZ company, an employee would own 100% of account balance without it being forfeited by employer but only after working for at least 4 years.