Change in Vesting Schedule? Or Not?

[Briandfox]

I am working on a Plan that ceased a safe harbor enhanced matching contribution before the 2015 Plan year and implemented a new discretionary matching contribution subject to vesting. for the 2015 year.

The discretionary matching contribution is the same formula as the enhanced safe harbor matching contribution.

Consequantly, one of the people I work with expressed the opinion that the change is really an amendment to the Plan's vesting schedule 100% vested matching contribution to a match subject to a vesting schedule.

As a result, he believes that participants who had previously received safe harbor matching contributions would have to be given the choice between a 100% vesting schedule and a 3-year cliff vesting schedule.

I don't think that this is correct.

I think an adp safe harbor contribution is by it's nature a 100% vested contribution and a non-safeharbor match is subject to vesting. If the employer decides to implement the safe harbor again it will of course be 100% vested.

Any thoughts?

[Lou S.]

You are correct.

It is a different source and should be tracked as such.

The only way they'd be 100% is if the vesting schedule was already 100% on that type of match and you are now changing it to 3 year cliff. If non-safe harbor match was already 3 year cliff, then that's the schedule it would go on.

[Briandfox]

Does it make any difference that the non-safe harbor match is a new match in 2015 being added after the cessation of the prior safe harbor?

[BG5150]

Nope.