Question

quiz
question 3 of 6
what does it mean when the money in your 401(k) is vested?
select a response.
you can keep the money your employer contributed, even if you leave your job.
you will not have investment gains in your employer - sponsored retirement plan.
you will never have to pay taxes on your employer - sponsored retirement plan.
you can withdraw your money at any time without a penalty fee from the irs.

Explanation:

Vesting in a 401(k) refers to the process by which an employee gains full ownership of employer - contributed funds over time. Once vested, the employee has the right to keep those employer - contributed funds even if they leave the job.

• The second option is incorrect because investment gains are not directly related to vesting. Vesting is about ownership of contributions, not gains.
• The third option is wrong as taxes on 401(k) (both contributions and withdrawals) are subject to tax laws. Vesting does not eliminate tax obligations.
• The fourth option is incorrect. Withdrawal rules (including penalties) are separate from vesting. Vesting is about ownership of employer - contributed money, not withdrawal flexibility.

Answer:

You can keep the money your employer contributed, even if you leave your job.