Disregardable Vesting Service

[dmb]

A Client currently has a PS plan, he would like to start a DB plan in 2003 and not fund the PS plan. For vesting service, is it allowable to disregard service prior to the DB effective date or must the PS service be included?? Thanks.

[david rigby]

IRS Reg. 1.411(a)-5. http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html

Section (b) gives the periods of service that can be excluded. Subsection (3), including (3)(v), indicate that your PS plan would not be a "predecessor plan" and the service prior to establishment of DB plan can be ignored for the DB plan vesting service. But read carefully, subsection (3)(ii).

Of course, there might be some very good reasons to be more generous.