Question: We’re thinking of updating the retirement benefits at our company. Does the IRS allow employers to set up a 401(k) plan with immediate vesting for matching contributions?

A: Yes, a 401(k) plan can be created to allow for immediate vesting. At minimum, under IRC Sec. 411(a)(2)(B), there are two vesting options companies can choose from for employer contributions (including matching contributions) to qualified defined contribution plans. With the first option, known as three-year cliff vesting, 401(k) plan contributions…