Participating Employer

[DLavigne]

We have a plan that had a participating employer using the plan. The participating employer decided to discontinue participation in the sponsoring employer's plan and start up its own plan. The document says that this is permitted. It also states, "The Trustee shall thereafter transfer, deliver and assign Contracts and other Trust Fund assets allocable to the Participants of such Participating Employer to such new trustee or custodian as shall have been designated by such Participating Employer, in the event that it has established a separate qualified retirement plan ..."

Does anyone know if that means the vested account balance of those participants or is it their entire account? If it's the vested balance, then it's treated as a rollover into the new plan? If it's the entire balance, then it's subject to the new plan's vesting schedule or the old plan's?

Thanks!

[Guest BBiggs]

We have a plan that had a participating employer using the plan. The participating employer decided to discontinue participation in the sponsoring employer's plan and start up its own plan. The document says that this is permitted. It also states, "The Trustee shall thereafter transfer, deliver and assign Contracts and other Trust Fund assets allocable to the Participants of such Participating Employer to such new trustee or custodian as shall have been designated by such Participating Employer, in the event that it has established a separate qualified retirement plan ..."

Does anyone know if that means the vested account balance of those participants or is it their entire account? If it's the vested balance, then it's treated as a rollover into the new plan? If it's the entire balance, then it's subject to the new plan's vesting schedule or the old plan's?

Thanks!

I see this as a design issue. In terms of what accounts to transfer, I imagine it is both vested and unvested. It is a design issue insofar as you could subject the unvested portion to a less burdensome vesting schedule in the new plan, or grandfather in the vesting schedule of the old plan with respect to those unvested dollars. What you cannot do is subject those unvested amounts to a more burdensome vesting schedule under the new plan.