Which of the following statements about contributions to a qualified plan is CORRECT?

The correct answer highlights an essential principle of qualified retirement plans: employees are always 100% vested in their own contributions. This means that any amounts an employee contributes to the plan are owned by them and cannot be forfeited. This is a fundamental part of retirement plan design, ensuring that employees have a guaranteed right to the funds they have personally contributed, promoting a sense of ownership and encouraging retirement savings.

While the other options may touch on important aspects of qualified plan structure, they do not accurately capture the immediate rights employees hold over their contributions. For instance, employer contributions typically follow different rules regarding vesting schedules and may not be immediately vested. Additionally, while employees may have certain nonforfeitable rights in employer contributions, these rights depend on the specific vesting schedule established by the employer. Understanding these distinctions is crucial for both employees and employers navigating retirement plan benefits.