Vesting applies to which type of benefits?

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

Answer: (C)

Vesting is about when you gain non-forfeitable rights to benefits that your employer contributes to a plan. In pension and savings plans, employer contributions may be tied to a vesting schedule, meaning you don’t own those contributions until you’ve earned them through your years of service. Vesting can happen immediately in some plans or over time, either gradually (graded vesting) or after a specific waiting period (cliff vesting). That’s why vesting applies to pension and savings plans. Leaves of absence don’t determine ownership of employer contributions, net pay refers to take-home pay rather than future rights, and self-employed tax isn't a benefit plan.