Question

Jamie has worked for ABC Printing for 5 years. During this period, ABC Printing has contributed $25,000 to her noncontributory retirement plan. Assuming ABC uses cliff vesting, the longest period allowed, how much will Jamie be able to roll into an individual retirement account (IRA) if she leaves ABC Printing

Answer 1

Under cliff vesting, an employee becomes fully vested in an employer's contributions after a specified period of service. In this case, the longest period allowed is 5 years, which is the same amount of time that Jamie has worked for ABC Printing. This means that Jamie is fully vested in ABC Printing's contributions to her noncontributory retirement plan.

Assuming that Jamie decides to leave ABC Printing, she will be able to roll over the entire $25,000 contributed by ABC Printing into an individual retirement account (IRA). This is because Jamie is fully vested in the contributions made by ABC Printing to her retirement plan, and the funds belong to her.

It is important to note that if Jamie decides to withdraw the funds instead of rolling them over into an IRA, she may be subject to taxes and penalties. Therefore, rolling over the funds into an IRA is often the more beneficial option for individuals who are leaving their employer.