Vesting

[k man]

Is there a possible discrimination issue if a plan sponsor starts a plan and allows all people employed as of a certain date to be 100% vested in all current and future contributions and the plan makes all new hires subject to a vesting schedule? The existing employees are not being credited with past service as they have only been employed for one or two years.

I think this is a current availability of rights or benefits issue. Does anyone agree or disagree?

[david rigby]

I think it is a vesting schedule.

[k man]

Im sorry but I dont understand your answer?

[Tom Poje]

k man:

I think what he is saying is the following:

you have a plan with 100% vesting.

if you want, you can amend the plan to 2/20 vesting.

certainly thats not a problem.

you can't take vesting away from someone, so those ees already 100% vested remain 100% vested.

so, you probaly can do what you asked about without worrying about BRF.

[k man]

I think there might be a subtle difference. Under your scenerio are you making all future contributions, regardless of to whom they are made, subject to the 2/20 or are you making the contribution 100% vested to some and subject to the 2/20 to others? Also, I think there are certain rules for amending vesting schedules.

[Tom Poje]

I think the regs say you have to give anyone under the old schedule a choice between the old and the new. the regs also add this option must be available for anyone with at least 3 years of service. My understanding this is the maximum, if you wanted to, you could say anyone with 2 years prior or one year prior, etc.