cross-testing 401(k)/CBP: different vesting schedules?

[EGB]

Facts : Cash Balance Plan ("CBP") covering only HCEs is cross-tested with a 401(k) plan. Both have 6-year graded vesting schedules. In 2008, the Pension Protection Act will require CBP vesting schedule to be changed to vest over 3 years. Will the vesting schedule in the 401(k) plan have to be changed to a schedule as least as favorable as the CBP to avoid a discrimination problem under 1.401(a)(4)-11©?

Would the answer change if the CBP covered both HCEs and NHCEs?

Any thoughts would be greatly appreciated.

[EGB]

Does 1.401(a)(4)-11©(2) allow us to use two, different vesting schedules in the cross-tested 401(k)/cash balance plan since it states that statutory vesting schedules will be deemed equivalent?

Facts : Cash Balance Plan ("CBP") covering only HCEs is cross-tested with a 401(k) plan. Both have 6-year graded vesting schedules. In 2008, the Pension Protection Act will require CBP vesting schedule to be changed to vest over 3 years. Will the vesting schedule in the 401(k) plan have to be changed to a schedule as least as favorable as the CBP to avoid a discrimination problem under 1.401(a)(4)-11©?

Would the answer change if the CBP covered both HCEs and NHCEs?

Any thoughts would be greatly appreciated.

[Mike Preston]

I think this is indeed correct. I look for Congress to force 2 or 3 year 100% vesting soon anyway on all plans.

[AndyH]

Not that Mike needs support, but this came up at a conference recently with IRS people and Mike's answer was the consensus answer there also.

[Mike Preston]

Thanks, Mike needs all the support he can get. It is a jungle out there!