What is the maximum vesting period for a Deferred Profit-Sharing Plan (DPSP)?

What is the maximum vesting period for a Deferred Profit-Sharing Plan (DPSP)?

• A. 5 years
• B. 2 years
• C. 3 years
• D. 10 years

Answer: (B)

Vesting period is the waiting time before employer contributions to a DPSP become the employee’s property. For a Deferred Profit-Sharing Plan, the maximum vesting period allowed is two years. This means contributions may not become fully owned by the employee until two years of service, and once vested, the funds belong to the employee under the plan’s terms. The other timeframes listed are longer than the permitted maximum, so they aren’t allowable vesting periods for a DPSP.

Vesting period is the waiting time before employer contributions to a DPSP become the employee’s property. For a Deferred Profit-Sharing Plan, the maximum vesting period allowed is two years. This means contributions may not become fully owned by the employee until two years of service, and once vested, the funds belong to the employee under the plan’s terms. The other timeframes listed are longer than the permitted maximum, so they aren’t allowable vesting periods for a DPSP.