Merger - Accelerating Vesting

[Guest KGriffith]

Parent Company A has 2 subsidiaries that each sponsor their own pension plan (410(B) coverage is satisfied). Sub B's plan merges into Sub C's plan in 2002. Each plan has a 5-year cliff vesting schedule. However, Sub B's plan states that NRA is 65 and ERA is 55 & 10 YOS and Sub C's plan states that NRA is 62 and ERA is 55 & 15 YOS. After the merger, each group's benefit will continue to be maintained separately (under the terms of each plan prior to the merger). The question is, can we maintain, in essence, 2 different vesting schedules, one for each group?

[mbozek]

As a general rule a plan may provide different vesting schedules for different groups of employees so long as the vesting provisions are not structured to evade the vesting requirements of ERISA. See reg. 1.411(a)-3T.