Question

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 can keep the employer - contributed money even if they leave the job.

• The second option is incorrect because investment gains are not related to vesting. Vesting is about ownership of contributions, not investment performance.
• The third option is wrong. Taxes on 401(k)s are deferred, not eliminated. When you withdraw the money (usually in retirement), you will pay taxes on it.
• The fourth option is incorrect. There are generally penalties for early withdrawals from a 401(k) (before age 59.5), and vesting has no bearing on this rule. Vesting is about ownership of employer - contributed funds, not withdrawal penalties.

Answer:

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