Vesting and BRF

[justatester]

I have a plan that has several different vesting schedules based on employee classification...

Group A: 3 Year Cliff with zero vesting until year 3

Group B: 3 Year Grade- 0-1=0%, after 2 =20%, after 3 = 100%

Group C: 3 Year Grade- after 1=25%, after=2 =40%, after 3=100%

Group D: 3 Year Grad-after 1=25%, after 2=50%, after 3=100%

Would BRF testing be required? Or since everyone is vested by after year 3, the vesting schedules would be considered nondiscriminatory?

Question 2: Plan changes vesting schedule for all new employer contributions. New contributions vest at a 3 year cliff. Old contributions vest at a 5 year cliff. Would BRF be required? In my opinion no, since all old money vests at one schedule and all new money vests at new schedule.

Question 3: Is a 6 year graded schedule deemed equivalent to a 3 year graded schedule. My thinking is yes since the 6 yr graded and the 3 year cliff are deemed equal and if you are using a 3 year cliff you can partially vest prior to year 3.

[Tom Poje]

1.401(a)(4)-11©(2) would say that a 2/20 and a 3 yr cliff vesting schedule areequivalent, but no such indication for the schedules you indicated.

if all the NHCEs worked under schedule A and HCEs worked under the other schedules that would obviously be discriminatory.

as for your question about changing vesting schedules and old $, etc. you would have tested the old dollars previously so there shouldn't be any need to retest simply because a vesting schedule was changed that does not affect those old dollars.

[GMK]

Long live the King.

[Tom Poje]

my father thanks you, my mother thanks, and I thank you.

still singing my old favorite pension songs

(for the 401k enrollment meeting)

Wise Men say

only fools don’t put in

and I can’t help

deferring into you

Shall I save?

how much should I put in?

For I can’t help

deferring into you

I will get a match

they put it in for me

a great big wad of cash

some things are meant to be

take 5 grand

invest each year for me too

for I can’t help

deferring into you

I will get a match

they put it in for me

a great big wad of cash

some things are meant to be

take 5 grand

invest it for me too

for I can’t help

deferring into you

for I can’t help deferring into you.

……….

to the tune of Are You Lonesome Tonight

(Hitting retirement age and not having saved)

Are you a poor one tonight

Do you miss cash tonight?

Are you sorry deferrals didn’t start?

Does your memory stray, to that four – oh – one – kay

When you should have deferred on your part?

Does the account in your name, seem empty and bare

Do you gaze at your wallet, and see nothing there?

Is your heart filled with pain, have you financial strain

Tell me friend, are you a poor one tonight?