Question

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

Answer 1

The amount that will vest immediately in Merrill's SIMPLE 401(k) plan is $1,200.

Step-by-step explanation:

In a SIMPLE 401(k) plan, the immediate vesting period for employer contributions is determined by the plan document. However, for Merrill's case, it is stated that his employer contributes 3% to the account. This means that the amount contributed by the employer will vest immediately, as there is no specified vesting schedule mentioned.

Therefore, the correct answer is b. $1,200.