Full vesting and investment gains and losses

[Guest cpp]

A Company has a money purchase pension plan with a 5-year cliff vesting schedule. The plan will be frozen effective March 1, 2004. The Company also has delayed forfeitures, (i.e. no forfeiture until 5 one-year breaks in service). The Company knows that it will have to fully vest those participants who have terminated employment but not yet forfeited, but the issue is how to compute the accrued benefit/account balance. Specifically, must the account balance of the inactive participant be adjusted for investment gains and losses for the time period after their termination of employment?

[WDIK]

I'm not sure I totally understand your post, but have the following observations:

1) I didn't think that a plan freeze necessarily resulted in 100% vesting.

2) Accounts continue to receive gains/losses under a frozen plan.

[david rigby]

As WDIK states, a plan freeze should not trigger 100% vesting in this case, but for other DC plans, watch for IRC 411(d)(4)(3)(B).

Careful use of terminology may be important. The original post stated "frozen", but the intent might have been "terminate". And WDIK is correct that account balances always reflect investment activity after termination of employment until the account is distributed.