Company xyz has the following vesting schedule in place for its 401(k) plan.

years of service vested percentage
less than 1 0%
1 25%
2 50%
3 75%
4 or more 100%
which statement describes how company xyz uses vesting with employer contributions to 401(k) plans?

a.
when employer contributions are added to a 401(k) account, the funds are immediately owned by the employee.
b.
after working a specific amount of time for the employer, the employer contributions become the full property of the employee.
c.
employees keep employer contributions when they move to a different job, no matter how long they have worked for the employer.
d.
employees in managerial positions own employer-contributed funds immediately, while other employees must work for the employer a minimal period of time to own employer-contributed funds.

B.

After working a specific amount of time for the employer, the employer contributions become the full property of the employee.

Explanation:

401k is retirement savings plan where an employee chooses to contribute a portion of their salary and the employer also contributes to that account. The latter can match dollar for dollar, 50% or any percentage as stated in the employment contract. Vesting in itself means full ownership of the account balance by the employee. Based on XYZ company, an employee would own 100% of account balance  without it being forfeited by employer but only after working for at least 4 years.

expected return 12.60%

Explanation:

we have to weight the outcomes:

we multiply the return consiering the probability of occurrency then, we add them to know the expected return o nthe investment which, in this case, is 12.60%