Will freeze of MPPP cause full vesting?

[chris]

Will amending a MPPP to a 0% of compensation allocation formula cause participants to be 100% vested? 411(d)(3) discontinuance of contributions appears to only apply to PSP's and not MPPP's. Also, Rev Rul 2002-42 holds that 100% vesting is not required where MPPP merges into a PSP. Big picture seems to be the same...... going from a required contribution to a discretionary contribution. Client has both a MPPP and a PSP. Client wants to freeze the MPPP and just utilize the PSP going forward.

[kocak]

maybe, maybe not. My understanding is that freezing (amending to 0%) a MPPP does not automatically result in 100% vesting. If it is a freeze and a plan termination, then yes 100% vesting applies.

With no formal plan termination, you still have to be careful that a partial termination has not occurred. This comes up when dealing with forfeitures, etc. I think it is referred to as a horizontal partial term.

It is clear that you can freeze the MPPP contribution, and merge it into the PSP without 100% vesting, if that plan design makes sense in your case.

michele