Vesting after plan freeze

[Gary]

If a plan (10 employee plan) is frozen say 1/1/08 is it required that emplyees still receive vesting years of service after 1/1/08?

My recollection is yes and that this is fairly fundamental, but I did not observe anything explicit on this at this time.

[Andy the Actuary]

Don't know if this helps but 411(a)(7) defines employee's accrued benefit as determined under the plan. So, if the plan freezes benefits, so be it. 411(a)(5) defines "years of services" without regard to the plan. I.e., you can't amend plan to freeze years of service for vesting purposes since the definition is plan independent. Other than this, while wording may exist, have never seen in the code, regulations, etc. specific wording that states you can't freeze vesting service.

[mwyatt]

Also look to the case that a plan frozen with adequate funding requires full vesting as part of the freeze (of course, most plans freezing are under funded).

[Andy the Actuary]

Also look to the case that a plan frozen with adequate funding requires full vesting as part of the freeze (of course, most plans freezing are under funded).

I always wondered about this one. 1.411(d)-2(b)(2) speaks of vesting if potential reversion created. In many cases "yes" or "no" is clear, but what about borderline? How would you determine? Would you have to bid out annuities and estimate lump sums? Or is this more like what Justice Potter Stewart said about pornograpy? I can't define potential reversion but I know it when I see it.