When does vesting occur?

[Blackbirch]

Sounds simple, I know.

Assume the following:

DC plan with 5-year graded vesting.

Vesting service is defined as calendar year with 1,000 hours.

Following 2009 plan year, participant is 60% vesting.

Participant completes 1,000th hour in April, 2010.

Under this scenario, the participant will certainly get his additional 20% vesting for 2010 and will be 80% vested following the 2010 year. Nothing (not death, termination of employment, or burning the office down) will change that. Having completed a year of service for 2010, the participant will receive vesting credit for the year. But WHEN?

Specifically, if the participant wishes to take an in-service distribution in May, 2010, he obviously cannot take a distribution of the unvested portion. But how vested is he at that moment in May? Is he 80% vested because he's already completed 2010's 1,000 hours? Is he 60% because 2010's not over yet?

Sal's got an example on page 4.73 that's implying that either approach is permissible (although recommending crediting of the additional 20% immediately upon completion of the 1,000 for the sake of administrative hassle), but I was hoping for something more authoritative. Surely this is an issue that somebody's had to deal with on a practical level, before!

Any thoughts?

[BG5150]

We always give it to them when they get the 1000 hrs.

[Bird]

If I knew for sure they had 1000 hours I would give them the year of service.