Special vesting rules apply to qualified defined contribution plans with voluntary employee contributions and matching employer contributions.Which of the following statements is (are)true with respect to these vesting rules?
I.Employer contributions must vest immediately.
II.Graded vesting is permitted,and employer contributions must be 20 percent vested after 2 years,with an additional 20 percent vested in each of the next 4 years.

Question

Quizplus · Accepted Answer

The statement that is true with respect to these vesting rules is II only. Qualified defined contribution plans with voluntary employee contributions and matching employer contributions can have graded vesting, where employer contributions must be at least 20 percent vested after 2 years and an additional 20 percent vest each year until the employee is fully vested after 6 years. However, there is no requirement that employer contributions vest immediately.

Special Vesting Rules Apply to Qualified Defined Contribution Plans with Voluntary