What does a retirement plan's vesting schedule indicate?

A retirement plan's vesting schedule is crucial as it outlines the period over which employees earn the right to keep the employer's contributions to their retirement account. Vesting refers to the process by which an employee gradually gains ownership of employer contributions to their retirement savings, often contingent on the employee's length of service with the company.

Understanding the vesting schedule is important for employees because it affects the amount of money they will ultimately receive from their employer's contributions if they leave the company before reaching full vesting. Different plans may have different vesting requirements; for instance, some may offer immediate vesting, while others may take several years before an employee is fully vested.

This concept explains why the other options are not correct. The timeline for contribution initiation doesn't address the ownership of employer contributions. The terms for withdrawals pertain to when and how employees can access their funds, rather than ownership. Lastly, interest rates for retirement accounts relate to growth and earnings on the investments, not to ownership of contributions made by the employer. Thus, the correct interpretation of a retirement plan's vesting schedule is the period over which employees acquire full ownership of those employer contributions.