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The one thing you don't say is if you think people's balances are actually wrong. I get bad reporting is annoying but if they forf people and reallocated them correctly for example what is the issue in your mind? Maybe the reporting is so bad you can't tell???? If the amounts are wrong I agree there is an issue but not sure what you expect the DOL to do. I guess my thoughts would depend on if you thought people's balances were wrong or just or poorly recorded. My guess is also this is a contract issue not retirement law. A recordkeeper presumably agreed to do a job correctly and failed to do so. That strikes me more as a breach of contract than an ERISA problem. Not the clearest answers.

With regard to "shifting" and what to do when the 1,000th hour is met, the rules for eligibility and vesting can have dissimilar results. The first eligibility computation period (ECP) must be the 12-month period beginning on the date of first hire for all plans. So a plan that wants to use the plan year for eligibility must "shift" to the PY after that first ECP to that first overlapping PY. That is not necessary for vesting, i.e., the first vesting computation period (VCP) does not need to be the first 12 months after the date of hire (although it can be), so there does not need to be any shifting or any overlap (a plan can use the PY for vesting without regard to when during the PY the employee is hired). Also, even when plan is silent, many practitioners do not credit a YoS for eligibility until the last day of the ECP. One reason is that the employee can't enter the plan if they leave during the first ECP and never come back, even if they have the 1,000 hours. In contrast, for vesting, once the 1,000th hour is credited, there is no point in not vesting at that point, i.e., there is no reason to wait until the end of the VCP as the vesting credit will need to be credited no later than the end of the VCP anyway (you don't need to be employed to get the vesting credit). If you were to pay out immediately at the 1,000th hour without giving credit for that YoS, then you will end up needing to make another distribution to supplemental the first distribution to reflect the higher vesting percentage at the end of the VCP of severance. Everything above is subject to specific plan language to the contrary. For example, a document might have more specific provisions, such as plan entry upon when the 1,000th HoS is credited during an ECP, or perhaps even a "parallel" track for shifting the VCP so that each VCP coincides with each ECP. The text of the first paragraph of this response is intended only to illustrate how and why the YoS requirement will often play out differently for eligibility than for vesting for many plans that, despite the seemingly odd results, are fully compliant with the Code.

Small correction: the increase is not taken into account for purposes of calculating the cushion. Otherwise, it is taken into account.