What term refers to employees becoming 100 percent vested in

What term refers to employees becoming 100 percent vested in their retirement pr - aPHR Prep

Question

What term refers to employees becoming 100 percent vested in their retirement program after a specific number of years of service?

Answers

correct
Cliff vesting
Graded vesting
Immediate vesting
Eligibility vesting

Explanation

Explanation

The Correct Answer is: A. Cliff vesting

Cliff vesting is a retirement plan vesting method in which employees become fully, or 100 percent, vested in employer contributions after completing a specified period of service. Before reaching that point, employees have no vested rights to employer contributions. Once the service requirement is met, full ownership is granted at once, rather than gradually over time.

Why the other options are incorrect:

B. Graded vesting
Graded vesting allows employees to become vested in employer contributions gradually over a period of time. Ownership increases incrementally each year rather than becoming fully vested all at once after a specific service milestone.
C. Immediate vesting
Immediate vesting grants employees full ownership of employer contributions as soon as they are made, with no service requirement. This does not involve waiting a specific number of years to become fully vested.
D. Eligibility vesting
Eligibility vesting is not a standard retirement plan term. Eligibility typically refers to participation requirements, not the process by which ownership of employer contributions is earned.

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