Vesting Service and last day

[Guest Serena]

Has anyone heard of vesting defined as being employed on the last day of the year- here is wording from the SPD.

"Core contributions are 100% vested after you have completed two years of vesting service. You are credited with a

year of vesting service on each December 31 in which you are employed."

Is this a form of elapsed time?

Thanks

[Guest Brian Theismann]

Has anyone heard of vesting defined as being employed on the last day of the year- here is wording from the SPD.

"Core contributions are 100% vested after you have completed two years of vesting service. You are credited with a

year of vesting service on each December 31 in which you are employed."

Is this a form of elapsed time?

Thanks

Does the plan use calendar plan years?

I think the quote from the SPD does not support the idea that a participant needs to be employed on the last day of the year. But are you saying that the plan has no one thousand hour requirement; that merely working one hour during the year will count as a year of service?

My initial reaction is that it sounds somewhat like an equivalency, but such a full-year equivalency is not listed in the regulation. Maybe someone else here works with elapsed time more than I do.

http://www.dol.gov/dol/allcfr/Title_29/Par...2530.200b-3.htm

[Guest Serena]

Yes it is calendar year. So you just have to work one day for a year of vesting?! Make sure you are there on that day!

[John Feldt ERPA CPC QPA]

Uunder the elapsed time method, no minimum hours are required each year to earn a year of service for vesting, they simply must remain employed.

If the plan has a 3-year cliff vesting schedule and uses elapsed time vesting, then anyone who stays employed until the 3rd anniversary of their initial employment, regardless of hours worked, has become 100% vested. This assumes no breaks in service occur during that time.

[Guest Brian Theismann]

Yes it is calendar year. So you just have to work one day for a year of vesting?! Make sure you are there on that day!

Ha! What does the actual plan document say as opposed to the SPD?

[Guest Serena]

December 31 has nothing to do with most employees anniverary

[John Feldt ERPA CPC QPA]

Perhaps the plan document is written so that it slightly shortens the normal maximum length of time allowed under the elapsed time method for vesting.

For example, an employee hired on March 1, 2009 normally does not have a year of vesting under the elapsed time method until they are employed through February 28, 2010. If the plan is written as you suggest, then perhaps it's indicating that they would have a year of service for vesting on Decemebr 31, 2009 (a little earlier)?

Also, employment is not necessarily 'being there' on that day. Employment is a relationship between employer and employee.

For example, if the plan year ends June 30 and you did not show up for work on June 30, does that mean that you were not employed on the last day of the plan year? Contrast this to the employer ending your employment on June 29th.

In each case, you weren't at work on June 30, but your employment relationship is the true question that needs to be answered.