Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

Which employees qualify to contribute to an ERISA qualified plan?

1. Employees who are 18 years old with one year of service

2. Employees who are 21 years or older with one year of full-time service

3. All employees, regardless of age

4. Employees with any duration of service

The correct answer is: Employees who are 21 years or older with one year of full-time service

The correct answer highlights the key provisions set by the Employee Retirement Income Security Act (ERISA) concerning employee eligibility for qualified plans. Under ERISA guidelines, employees typically must reach the age of 21 and complete one year of full-time service to qualify for participation in an employer-sponsored ERISA-qualified retirement plan. This ensures that participants have a certain level of maturity and commitment to the employer, allowing for a more stable plan participant base. The other options presented diverge from these established requirements. For instance, while option A specifies employees who are 18 years old with one year of service, this does not align with the stipulation regarding the minimum age. Similarly, option C's assertion that all employees are eligible regardless of age disregards the age threshold specified in the regulations. Lastly, option D, which claims that any duration of service qualifies employees, fails to acknowledge the mandated one year of service that is typically required. Each of these alternative choices overlooks the critical parameters established by ERISA for employee eligibility in retirement plans.