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100% vesting for a reduction in force (not a partial term.)


Guest Iwonder
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Guest Iwonder

Is it permissible to 100% vest participants who are losing their jobs because the division in which they work is being dissolved?

This is not a partial plan termination (not 20%).

Could vesting only the few participants affected be justified as "event-based vesting", when other participants in the plan, who are not in the terminated division, would not have their vesting accelerated?

Thank you

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Yes, the plan can be amended to provide vesting more generous than the minimum required.

Cautions:

1. make sure your amendment does not discriminate in favor of HCEs

2. step back and think about whether such amendment creates a precedent you might not want.

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.

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Guest Iwonder
Yes, the plan can be amended to provide vesting more generous than the minimum required.

Cautions:

1. make sure your amendment does not discriminate in favor of HCEs

2. step back and think about whether such amendment creates a precedent you might not want.

Thank you very much!

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