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Vesting For Rehired Employee

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3 replies to this topic

#1 MBCarey


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Posted 22 December 2005 - 08:35 AM

This is regarding vestint for a rehired employee. Original hire date was 2/8/1999 - term. dated 6/28/2001. At the time of termination, the plans vesting was 100% after two years which because the employee worked 1,000 in 2001, he was considered 100%. He has now been rehired as of 8/2005. On 7/1/2001 the vesting for the plan was amended amended to a 5 year cliff. Document states anyone employed on 6/30/2001 will vest according to the original vesting schedule and anyone hired after 7/1/2001 will vest according to the amended vesting.

I know this participant's hire date needs to be adjusted to give him credit for prior service since he did not incur (5) one year breaks and he has been allowed back into the plan on his rehire date not having to complete eligibility again. But what vesting schedule should apply to him? Should he remain 100% Vested?

#2 pmacduff


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Posted 22 December 2005 - 11:30 AM

IMHO he was already 100% vested the first time around & did not experience the 5 breaks-in-service, so he remains 100% vested. Doesn't the plan doc address this issue in the any of the "upon rehire", "break-in-service" or "vesting" sections?

#3 MWeddell


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Posted 22 December 2005 - 02:16 PM

I agree. It sounds like he was more than 0% vested when he quit, he didn't experience 5 consecutive one-year breaks in service, so his pre-break vesting percentage, which was 100%, still applies. His vested percentage can't have been lowered.

#4 jae3207


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Posted 23 December 2005 - 11:11 AM

Does the document define "new hires" to include rehired former employees? If so, the plan may be allowed to apply the 5 year cliff to monies accrued after his/her rehire date.