Employees are said to be vested after they have worked a specified period. This concept is associated with which type of plan?

• A. Leaves of absence
• B. Pension and savings plans
• C. Net pay
• D. Self-employed tax

Answer: (B)

Vesting is about when employees earn ownership of benefits provided by the employer, especially in retirement and savings plans. In these plans, employer contributions may not be fully owned until the employee completes a specified period of service. This is why vesting is tied to pension and savings plans, which commonly use vesting schedules to determine when the employee truly owns the employer-contributed portion. Leaves of absence relates to time off, net pay to take-home pay after deductions, and self-employed tax concerns taxes for the self-employed; none of these involve earning ownership rights to employer contributions.