Question

Which of the following is true regarding graduate vesting under the employee retirement income security act (erisa)? multiple choice

O an employee must be 100 percent vested after 3 years.
O an employee must be 20 percent vested after 2 years.
O an employee must be 50 percent vested after 4 years.
O an employee must be 80 percent vested after 4 years.

Answer 1

Under ERISA, an employee must be 100 percent vested after 3 years if the retirement plan follows a cliff vesting schedule. Therefore correct option is A

Step-by-step explanation:

Under the Employee Retirement Income Security Act (ERISA), graduate vesting is a process where employees attain a certain percentage of non-forfeitable rights to their employer-contributed retirement benefits over time.

Specific vesting schedules can vary based on the plan, but in general, the law mandates that an employee must become 100 percent vested by the end of a certain period, which can either be following a "cliff" schedule (such as 100% after 3 years) or a "graded" schedule (for example, 20% per year until fully vested after six years).

Therefore, the correct choice in this context would be that an employee must be 100 percent vested after 3 years, assuming the plan follows a cliff vesting schedule as permitted by ERISA.