Vesting in Combo DB/DC

[Doghouse]

Company has DB Plan and DC Plan, general tested in aggregate. DB plan covers only 2 owners. DC plan covers 4 NHCE staff. DB plan has 2 year wait/100% and DC plan has 1 year wait/6 yr graded vesting.

I think we may have a benefits, rights & features concern with respect to eligibility and/or vesting. Does anyone agree with me? On eligibility, vesting, or both?

Dog

[Lou S.]

I don't have an answer to your specific question, but don't you have a 401(a)(26) problem with only 2 of 6 in the DB plan?

[Doghouse]

I don't have an answer to your specific question, but don't you have a 401(a)(26) problem with only 2 of 6 in the DB plan?

That's because I made a typo - it's 2 in the DB and 3 in the DC.

[John Feldt ERPA CPC QPA]

The IRS has said that a 3-year cliff and a 6-year graded vesting schedule are identical for testing purposes, but yours has immediate vesting. This would appear to be subject to BRF testing. Just curious, has the IRS ever made a case of that?

The plans are aggregated for coverage, so the differing eligibility requirement does not appear to be a benefit right or feature to me.

Oh, by the way, you may want to read this link:

http://benefitslink.com/boards/index.php?showtopic=49421