JWRB Posted June 7, 2017 Share Posted June 7, 2017 I have a 401(k) plan that has a two year wait for employer profit sharing contributions, with immediate vesting for that contribution. The profit sharing provisions predated the implementation of a 401(k) program in the plan. There is, of course, a one year wait for 401(k) deferral contributions. The plan is currently top heavy, and the top heavy vesting schedule is 2/20. The question we have boils down to the following: can a plan run two concurrent vesting schedules for different employer contributions? The profit sharing contribution is very generous, and the plan sponsor is adamant about keeping the two year wait to receive it, and intends to maintain full and immediate vesting on that contribution. However, the plan sponsor wants to prolong vesting of the first year TH contribution as long as possible and utilize the 2/20 vesting for that contribution. Is this possible? Thanks! Link to comment Share on other sites More sharing options...
Bri Posted June 7, 2017 Share Posted June 7, 2017 My guess is that it's okay as long as you have a document that spells it out properly. A typical prototype might say that all the non-elective contributions are subject to one vesting schedule. And you shouldn't be able to amend later to un-vest the folks who may already have been swept in with full vesting. But I'd think new participants could be put on a 6 year schedule going forward. Lou S. 1 Link to comment Share on other sites More sharing options...
Bird Posted June 7, 2017 Share Posted June 7, 2017 Our (FTW) documents offer different vesting schedules for regular PS and TH contributions. Ed Snyder Link to comment Share on other sites More sharing options...
Lou S. Posted June 7, 2017 Share Posted June 7, 2017 I agree with Bird if the document allows for it not a problem. But does anyone else find it odd that the plan might have TH contributions on a slower vesting schedule than regular PS contribs? Link to comment Share on other sites More sharing options...
ugueth Posted June 7, 2017 Share Posted June 7, 2017 Perhaps the plan sponsor felt that they were willing to have discretionary contributions vest quickly since they are voluntary; but since they're forced to make top heavy contributions, they want them to vest over the maximum time frame allowable. Link to comment Share on other sites More sharing options...
JWRB Posted June 12, 2017 Author Share Posted June 12, 2017 Thanks for the responses, everyone. We're going to roll with it. Link to comment Share on other sites More sharing options...
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