Vesting schedule that starts at 20% in the third year still acceptable?

[Guest Enda80]

Does the law stilll allow a vesting schedule that starts at 20% in the third year of service? If the law does not allow this, when did it stop allowing such a vesting schedule?

[Kevin C]

For a DB plan, yes.

For a DC plan, no. Matching contributions, EGTRRA, effective PY beginning after 12/31/2001. For other employer contributions, PPA 06, for plan years beginning after 12/31/2006.

[J Simmons]

Does the law stilll allow a vesting schedule that starts at 20% in the third year of service? If the law does not allow this, when did it stop allowing such a vesting schedule?

Just a bit of clarification here. The DC graded vesting schedule must vest at least 20% once the EE has earned 2 vesting years of service. "In" the third year of service, the EE would only have at most 2 vesting years and thus 20% would be fine. Once the EE has earned the 3rd vesting year, then the EE would have to be at least 40% vested.