Brown, Inc., uses the three-to-seven year graded vesting approach for its defined benefit retirement plan.Peter has five years of service completed as of February 5, 2019, his employment anniversary date.Determine Peter's nonforfeitable percentage.

Question

Quizplus · Accepted Answer

Under the three-to-seven year graded vesting schedule, an employee's nonforfeitable right to employer contributions increases gradually each year starting from the third year of service until it reaches 100% in the seventh year. With five years of service, Peter would have a 60% nonforfeitable percentage (20% for the third year, plus 20% for the fourth year, plus 20% for the fifth year).