I have an employer who currently sponsors a Money Purchase Pension Plan. We are establishing a new 401(k) plan and the employer wants to merge the assets of the MPP to the 401(k) rather than terminate the MPP. I have advised the client that this merger could be looked at as a "termination" of the MPP and 100% vesting would be required. Since they don't want to 100% vest, I advised that they apply for a determination letter and let the IRS determine if full vesting is required. In the meantime, I have heard that the IRS is now of the opinion that the 100% vesting is not required in this situation. Is there anyone out there with a reference for this opinion????

I've heard it both ways, that a merger does trigger 100% vesting, and that it does not. From what I have heard, the IRS has not given a definitive answer to this question. We try to get our clients to take the conservative approach, and vest everyone at 100%.