Terminated Employees Vesting Schedule

[Guest bouncingsoul]

If a terminated participant is 40% vested but never takes a distribution and the plan decides to amend to 100% vesting....would this terminated participant automatically be bumped to 100%? Or could the plan still honor the 40% vested amount when the participant takes the distribution. I know a participant is essentially anyone with an account balance however I can see the plan sponsors side of this.

[WDIK]

I believe that the amendment to the vesting schedule could be drafted to apply either retroactively or prospectively.

[K2retire]

I believe that it is theoretically possible, but I've never seen it done. Perhaps this is because the amendment drafters often assume that such people have already been paid out. I've had many conversations with angry clients over the issue.

[GMK]

Would it work to amend so that persons who are employees of the company (or active participants in the Plan) at any time after some date, say, 7/1/2009, are subject to the new vesting schedule (100%), and all others continue on the previous vesting schedule?

[Belgarath]

I should think you'd have it apply only to participants with an hour of service on or after the effective date of the amendment.