Which of the following statements about the minimum vesting standards for a qualified defined benefit plan is (are)true?
I.Under cliff vesting,an employee must be at least 50 percent vested after 5 years of service.
II.Under graded vesting,an employee must be at least 20 percent vested after 3 years of service and 100 percent vested after 7 years.

Question

Quizplus · Accepted Answer

Under the Pension Protection Act of 2006, the minimum vesting standards for a qualified defined benefit plan specify that under cliff vesting, an employee must be 100% vested after 5 years of service, not 50%. For graded vesting, the law requires an employee to be at least 20% vested after 3 years of service, with vesting increasing by 20% each year until reaching 100% after 7 years, making statement II correct.

Which of the Following Statements About the Minimum Vesting Standards