Faster vesting for group of employees

[Guest Etseq]

Can anyone think of any problems that would arise if a plan is amended to provide for faster vesting, and require fewer hours of service to to comprise a year for vesting purposes for one particular group of employees but not for others? I can't think of any. The group of employees at issue are not highly compensated, and the current hours of service requirement in the plan is less than 1000. The plan is a multiemployer plan, and eligibility to participate is essentially immediate if the employee is covered by the contract.

[SoCalActuary]

The key problem is that multiemployer plans are subject to the governance of the plan sponsors, or the board of trustees.

My prior experience on this area is that you need the approval of the management side and the union side (easier to obtain) when improving plan benefits.

The actuary also needs to be involved. Don't forget that this amendment will result in more benefit payments, since more people will vest. Does the multiemployer plan have the room to allow a benefit increase in its funding? Look at asset/liability ratios.

[Guest Etseq]

Sorry, I should have been clearer. I only meant legal problems. Thanks though.

[SoCalActuary]

Actually, each of the issues is a legal problem.

Do the trustees agree?

Is the plan permitted to improve benefits?

If yes, then you simply amend, notify participants, modify the SPD,

and start administering the plan under the new rules.