Money Purchase Pension Plan did not follow Vesting Schedule.

[Guest KevinP]

I have a client that sponsors a MPPP and a PSP where the PSP allows for immediate vesting and the MPPP has a 2-20 schedule. When we took over the recordkeeping the prior recordkeeper had everyone 100% vested in the MPPP and the PSP. I attended the ASPA conference and they had a workshop Fixing Plan Problems without IRS Supervision. Looking through my notes I am not sure I can self correct this problem. Any ideas? I think this is a significant problem since it may affect a large portion of the workforce. One thought I had was to go forward with administering the plan in accordance with the document, but allow all participants who were already in the plan to remain 100% vested.

I would welcome any thoughts or suggestions.

[david rigby]

The TPA should probably not make this decision. Get the client and the client's attorney to do that.

[mbozek]

What have the particpants in the mp plan been told -- Did they get statements showing that they are100% vested. Or does the SPD state that they are subject to 2/20 vesting but that participants have been given 100% of the aco**** balances as distributions even though they were not vested. If it is merely an admin problem in that accounts were recorded incorrectly then it can be changed. If the participants have been told that they are 100% vested then the plan has two choices: continue 100% vesting and terminate the plan or restate the vesting on the grounds that the plan terms require that the vesting be corrected.