IRS Issues Guidance on Vesting Standards to Be Followed By Church Plans

[Carol V. Calhoun]

I've just gotten hold of some internal IRS guidance on the application of vesting requirements to plans governed by section 411(e)(2). While the guidance was primarily directed toward governmental plans, it indicates that it would also be applicable to church plans. For anyone who is interested, I've put a copy up at this link.

[John Feldt ERPA CPC QPA]

Thanks Carol, appreciate the link - that is very helpful!

The interesting section, to me, are the three vesting schedules they list (just an excerpt here):

We have included three safe harbor vesting schedules that we have determined, with advice from the Office of Chief Counsel, would satisfy the pre-1974 Code vesting requirements. It seems likely that the vesting schedules of most governmental plans are at least as favorable to participants as at least one of the safe harbor schedules. The safe harbor vesting schedules are:

1. 15-year cliff vesting schedule: The plan provides that a participant is fUlly vested after 15 years of creditable service (service can be based on years of employment, years of participation, or other creditable years of service).
2. 20-year graded vesting schedule: The plan provides that a participant is fully vested based on a graded vesting schedule of 5 to 20 years of creditable service (service can be based on years of employment, years of participation, or other creditable years of service).
3. 20-year cliff vesting schedule for qualified public safety employees: The plan provides that a participant is fully vested after 20 years of creditable service (service can be based on years of employment, years of participation, or other creditable years of service). This safe harbor would be available only with respect to the vesting schedule applicable to a group in which substantially all of the participants are qualified public safety employees (within the meaning of Section 72(t)(10)(8)).