Vesting and Rehires

[AJ North]

I am having some trouble getting my thinking clear concerning rehires who have a 5-year break and vesting. Specifically, the difference between the Rule of Parity and the Defined Contribution plan exclusion rules.

The plan in question used the DC plan exclusion rules and elapsed time vesting. The participant was 20% vested when they left and was rehired 7 years later. My question is would the participant retain any prior years of vesting to calculate contributions made to the plan after rehire? Or would they be disregarded? I do understand that any future years earned to calculate vesting would not be used to "recalculate" the non-vested account balance earned before the 5-year breaks in service.

Hope this makes sense.

[ETA Consulting LLC]

He's at 20% when he comes back since he was not zero-vested when he terminated. Any amounts previously forfeited will not be restored because he had 5 consecutive one-year breaks in service. This is, of course, provided that the plan adopted the rules of parity (which is not relevent in this instance) and the vesting breaks rules. Not sure if this answers your question.

Good Luck!

[Tom Poje]

would agree with above comments.

I've attached this before, but that was while ago. If the above answer didn't answer your question, perhaps this will.

this is the IRS guidelines, I believe break in service starts on page 5

minimum vesting standards.pdf

[AJ North]

Thanks to all for your comments