Which of the following statements is (are)true with respect to vesting under a qualified defined benefit retirement plan?
I.Vesting helps to reduce labor turnover.
II.An employee who terminates employment after four years of service has no vested retirement benefit under cliff vesting.

Question

Quizplus · Accepted Answer

I. Vesting can indeed help reduce labor turnover by providing an incentive for employees to remain with the company longer in order to earn a right to their retirement benefits. II. Under cliff vesting, employees typically become 100% vested after a certain period of service (often 3-5 years), so if an employee leaves after four years, they would have no vested retirement benefits if the plan requires more than four years for vesting, but this statement as a general rule is incorrect because if the plan's cliff vesting schedule vests at or before four years, the employee would be vested. However, the statement can be considered true in the context of a plan that requires more than four years for cliff vesting.

Which of the Following Statements Is (Are)true with Respect to Vesting