Vesting Service & "Pure" Elapsed Time

[Guest EMC]

What options are available for measuring vesting service under a plan that uses the Elapsed Time method of calculating vesting service?

My questions arises out of this example: a full-time employee who was hired on 7/1/2002 and who terminates on 6/29/2004 has only ONE period of service for vesting purposes using the "pure" Elapsed Time method. However, using an Hours of Service method (with a calendar year/plan year computation period), this same participant -- assuming he/she is full time -- would likely have THREE vesting years of service (for the 2002, 2003, and 2004 plan years). That is a pretty dramatic difference.

Query: can the Elapsed Time method be tailored in the plan document to "round up" partial periods of service, and if so, what are the limits of any such flexibility?

Thanks!

[Mike Preston]

I don't think there would be a problem with rounding up as the code and DOL regulations deal with minimum vesting rules, not maximum vesting rules.

The limitation would be if there was prohibited discrimination. This is unlikely, although I suppose there is always a situation or two where it might apply.