Plan ammended to Safe Harbor; can older, non-vested contributions be vested 100%, retroactively?

[Guest hodag]

Our plan has gone to Safe Harbor as of 1/1/05. We just found out that the existing non-vested funds would continue to vest under the old six year schedule. Can this be liberalized to fully vest those 'older' funds retroactively? I can understand not changing a vesting schedule to be unfavorable to the employee, but wouldn't it be ok to consider all employer match balances fuly vested? Our 401(k) provider is telling us no, but I don't have much faith in my contact there. Thanks.

[JanetM]

Of course you can vest all amounts by amending the plan. Just watch how you word the amendment. example - all accounts in plan as of 01/01/05. That way folks who took distribution prior to that won't come asking for forfeited amounts.

[austin3515]

I'm not sure I'd use the term "retroactively" cause that implies that previous distributions would need to be adjusted (although I'm sure that's not what you had in mind).

But yes, you can certainly provide full vesting for existing balances.

[Guest hodag]

Good information. Thank you for your input!