Pension plans must meet complex rules to retain their tax-advantaged status.These rules include all of the following except:

A) The plan must not discriminate in favor of highly compensated employees.
B) Employee and employer contributions must fully vest within five years.
C) The plan must adequately cover rank-and-file employees.
D) The plan must be established for the exclusive benefit of employees and their beneficiaries.

Question

Chase Haimerl · Accepted Answer

Final Answer : B, Explanation :  The statement Employee and employer contributions must fully vest within five years is incorrect as the Pension Protection Act of 2006 requires that employee contributions must fully vest immediately and employer contributions must vest either immediately or over a period not exceeding three years. Therefore, the correct answer is B.

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