Question

which statement is incorrect regarding vested benefits? select answer from the options below there is usually a certain minimum number of years of service. benefits are not contingent upon additional service under the plan. benefits are lost when the employee is terminated. the employee is entitled to receive such benefits even if they are terminated.

Answer 1

The incorrect statement about vested benefits is that they are lost when the employee is terminated. Vested benefits remain with the employee even after termination, and are designed to provide long-term economic security during retirement.

Step-by-step explanation:

The incorrect statement regarding vested benefits is that 'benefits are lost when the employee is terminated.' This is incorrect because once an employee's benefits are vested, they are entitled to those benefits even if they are no longer employed by the company. Vested benefits are not contingent upon additional service under the plan. Employers typically require a certain minimum number of years of service before an employee's benefits vest. These benefits are protected under the Pension Benefit Guarantee Corporation if the company faces bankruptcy.

Vested retirement benefits are critical because they provide economic security for workers after they retire, guaranteeing an income regardless of employment status. Unlike some forms of government assistance that may decrease over time, vested retirement benefits continue to provide support for the individual's lifetime. This helps retirees manage the effects of inflation and maintain their purchasing power over the years.