FICA Replacement Plan

[JRN]

A local government agency provides a Section 401(a) Money Purchase Pension Plan (the "MPPP") in lieu of Social Security. The MPPP is intended to be an "alternative retirement system" under IRC section 3121(b)(7)(F). The Employer contributes 12 percent of compensation for eligible employees.

The MPPP requires that employees complete one Year of Service (12 months and 1000 hours) to be eligible. And, the MPPP has a 5-year graded vesting schedule.

Two questions:

1) Can the MPPP be an "alternative retirement system" if it imposes a one Year of Service eligibility requirement? Full-time employees who have not met the one Year of Service requirement are not receiving the minimum benefit.

2) Can the MPPP be an "alternative retirement system" if benefits under the plan are subject to a vesting schedule? It just strikes me as inconsistent with the idea of replacing social security if benefits can be forfeited.

Thanks.