Jump to content

Vesting


Guest efstreet
 Share

Recommended Posts

Guest efstreet

When ERISA was passed into law in 1974, my company indicated in a letter that I was given three year credit for service prior to age 30 ( plan required you to be 30 years old to join), I also was given $1 monthly annuity credit for each year of prior service. I was also told that I was fully vested at age 37, and did not have to wait until age 40 and if I terminated service at age 37, I would be entitled to 50% of my annuity accumulation at age 55. The company's payout start at 50% for less than twenty years service and goes up in increments until 25 years of service is obtain with a payout of 63%

Question: Does the three years prior service credit (age 27,28,29) count toward total years of participating service, although years actually under the plan is 21 years. Am I entitled to benefit based upon 21 years or 24 years?

Link to comment
Share on other sites

Any plan can define separately vesting service and participating service. A participant might have been vested at 10 years of service, but have a lesser number of years of participating service, the former used to determine whether the participant is entitled to a benefit, the latter used to determine the amount of the benefit.

I'm unclear which you are asking about.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

Link to comment
Share on other sites

Guest efstreet

In reply to pax, I am interested in the latter, used to determine benefits. Does the three year credit for prior service, prior to age 30, count in determining benefit at age 55, were the benefit is a sliding scale from less than twenty year PARICIPATING service (50%) Twenty years PARTICIPATING service (52%), twenty-one year PARTICIPATING service (54%), ect, ect until Twenty-five year PARTICIPATING service (61%)@ age 55.

Also, SPD, was changed from year of service UNDER "THE"PLAN to "Participating Service" with the word PLAN, completely left out.

Link to comment
Share on other sites

Your orginal post indicates (I think) that the 3 years of service is vesting purposes. If so, and if the plan does not also state that it is used for participating (or benefit) service, then one should not assume it applies for any other purpose. However, it is also possible that the plan could have been amended later to change that.

SPD might indicate some ambiguity in plan language, but the plan's provsions will control. Possible exception could be language in a collective bargaining agreement.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...