our employer said that you have a 5-year graduated vesting plan for your employe
ID: 2806135 • Letter: O
Question
our employer said that you have a 5-year graduated vesting plan for your employer's retirement plan. This means that if you leave your job after 3 years you will:
A.
be able to take 60% of your employer's contributions and the earnings on those contributions with you to your new employer's retirement plan (or a rollover IRA).
B.
receive an employer matching contribution equal to $0.60 for every $1 you contribute.
C.
will have to work for 2 more years before you can participate in your employer's retirement plan.
D.
not be entitled to any of the funds in your employer's retirement plan.
Explanation / Answer
The answer is Option A-be able to take 60% of your employer's contributions and the earnings on those contributions with you to your new employer's retirement plan (or a rollover IRA).
Explanation- In grader vesting, vesting takes place regularly and incrementally over a period of several years.
Graded vesting will leave the employee in a situation where the Employers contribution would be divided into two parts- the vested part and the non- vested part. After 3 years, 60% of the contribution will be the vested part and therefore be fully owned by the Employee while the remaining 40% will remain to be owned by the employee.
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