IRS Issues Guidance on Vesting Standards to Be Followed By Governmental Plans

[Carol V. Calhoun]

We've had some discussion here in the past regarding what vesting requirements applied to qualified governmental plans. The confusion arises because Code section 411(e)(2) says that governmental plans are required to comply with pre-ERISA section 401(a)(4) and (7), but Code section 401(a)(5)(G) says that 401(a)(4) does not apply to a governmental plan.

I've now gotten a copy of an internal IRS directive on the subject, and have posted a copy of it at this link. Essentially, it is applying pre-ERISA section 401(a)(4) to the vesting standards of governmental plans, notwithstanding section 401(a)(5)(G). My analysis of the guidance can be found at this link.

[Dave Baker]

Carol, does the IRS document contain a date authored?

[Carol V. Calhoun]

Dave, it was authored April 30, 2012. (That date was apparently stamped at the top, not typed in, so it didn't appear when I converted the thing from PDF to HTML, but I've now added it.)

[Dave Baker]

Thanks! This is an important document. I enjoyed your analysis.