Entitled to DB proceeds?

[Guest JenMac]

Hello, I was laid off from a company due to a merger for which I had worked for close to 5 years. I was 3 months short of vesting. The merger automatically vested my 401k dollars, but they say not the DB dollars. I have read on DOL website that plan termination mandates immediate and full vesting, but in a merger situation, if the new company assumed the old plan, does this count for vesting purposes? Any advice would be appreciated. Thank you!

[JanetM]

You need to get SPD for the DB plan. Read the definition of year of service and the dates the plan uses for counting service credit. ERISA states if you have 1,000 hours worked during plan year you are credited with year for vesting purposes.

[david rigby]

Other issues which may need more facts:

- a company merger does not necessarily have any direct or immediate bearing on any plans. The assumption of a plan (that is, there is a new parent company) does not automatically change the plan or give anyone 100% vesting.

- did the company merger automatically vest you in your 401(k) plan or was there some other action? The former is possible, but not necessarlly expected. For example, the merger agreement itself could address a vesting question for plan A but not plan B; if so, that is important information, both with respect to what is included and what is not included.

- for either plan, were any involved in a plan merger?

- how many were laid off (percent is more important than absolute number)? if over 20%, it may be a "partial termination", the effect of which is to give 100% vesting to any of those "affected participants".

Perhaps you already know this, but it is very important to know whether there was a merger at all. For example, if the buyer bought a company via stock purchase ("lock, stock and barrel"), that is much different than if the buyer merely acquired assets of the seller.

[No Name]

Yes. Check the SPD. Most plans I work on vest Plan Years; years in which you work at least 1000 hours. An ugly example may be that you start work August of year one and leave June of year five. In this example, you probably don't get your year 1 vesting (less than 1000 hrs August-December) or year five (less than 1000 hours January - June).

Check the service crediting rules. Could be "elapsed time". Also, check the vesting schedule. Sounds like 5-year cliff vesting. I don't work union plans, but I think they may be subject to more permissive (less good for you) vesting schedules.