Merrill is a participant in a SIMPLE § 401(k) plan, and he elects to contribute 4% of his $40,000 compensation to the account, while his employer contributes 3%. What amount will vest immediately, if any?
A) $0
B) $1,200
C) $1,600
D) $2,800
E) None of above

Question

Quizplus · Accepted Answer

In a SIMPLE § 401(k) plan, both employee and employer contributions are immediately 100% vested. Merrill's contribution is 4% of $40,000, which is $1,600, and the employer's contribution is 3% of $40,000, which is $1,200. Therefore, the total amount that vests immediately is $1,600 + $1,200 = $2,800.

Merrill Is a Participant in a SIMPLE § 401(k) Plan