Rule of Parity...Grrrrrrr

[Just Me]

Employee was just rehired after a 6-year break in service. He had a couple of years of service, and was eligible to participate in the 401(k) Plan prior to the break, but did not elect to do so. Therefore, he was 100% vested in deferrals, and also 100% vested in the company matching contribution, but when he terminated, both of these were $0. So do we include the prior serivce or not under 411(a)(6)(D), which provides for excluding serivce for "nonvested participants." He was a participant, and "technically" 100% vested, but had no balance. Can we exclude the prior service or not? Can he be considered a nonvested participant if he was indeed a participant, and was at the 100% vesting level, but just didn't have any account balance because he elected not to particpate? Seems like 411 generally doesn't exclude serivce for vesting for years in which the participant elected not to contribute "salary deferral" type of contributions.

[Belgarath]

First answer, of course - check your document. This is likely to be spelled out pretty clearly. But I'd say no, you cannot exclude prior service. So participant enters immediately. All years of service will count toward determining vesting in the post-break account. IF there had been a partially vested pre-break account, then the non-vested amount would be forfeited, but that doesn't apply here, since participant was 100% vested, even though he was 100% vested in nothing.