Match Vesting Schedule

[Guest jim williams]

We amended our client's 401(k) plan for EGTRRA incorporating a graded vesting schedule for matching contributions as follows:

1 Year = 0%

2 Years = 0%

3 Years = 50%

4 Years = 75%

5 Years = 100%

Even though this schedule is more favorable then the standard 6-year graded schedule, would this schedule have to vest at least 20% in Year 2 to comply with EGTRRA?

[WDIK]

The vesting schedule used should be at least as favorable in each year as the required schedule.

[MWeddell]

Just to be clear about it, the vesting schedule you have is not permitted for a post-2001 matching contribution. The modification you suggest (20% vesting in year 2) would work.

Obviously, I've not addressed what to do about past distributions to those with 2 but less than 3 years of vesting service who earned an hour of service after the end of your 2001 plan year.