Deferred Compensation & Grandfather Provision

[Guest jcorona]

Hi Everyone,

I'm looking for a little assistance with the new 409A rules and the Grandfather Provision.

I understand that when you decipher when the compensation was deferred (either before or after January 1, 2005) you look at the vesting for the participant for those particular funds. The vested funds are tabbed as before 1/1/2005 and the unvested funds are tabbed as deferred after 1/1/2005. Now with the unvested portion does that maintain its vesting position as with the previous schedule?

Example: Plan's vesting schedule is 0-0-0-40-60-80-100. Participant is currently 80% vested. Thus the vested portion is earmarked as pre 1/1/2005. I know the unvested portion is post 1/1/2005. My question is that does the unvested portion remain at the point where one more vesting credit will vest the funds at 100% or does the vesting begin over again?

[E as in ERISA]

It should vest over the remaining schedule -- one year.