NRA Definition and 100% Vesting

[cheersmate]

When is the following participant deemed 100% Vested:

DOB 1948 (age 65 in 2013)

Entry Date 1/1/2012

Resigned 2014

Plan's NRD is 1/1/2017

"Normal Retirement Age" as elected in the Plan's Corbel Adoption Agreement is the later of the Participants 65th Birthday or the 5th Anniversary of the first day of the Plan Year in which participation began

1.52 "Normal Retirement Age" means the age elected in the Adoption Agreement at which time a Participant's Account shall be nonforfeitable (if the Participant is employed by the Employer on or after that date).

Given the above, is this participant 100% vested in 2013, at his/her 65th bday, or as of 1/1/2017?

Thank you.

[My 2 cents]

ERISA does not require that people be treated as fully vested upon attainment of age 65. ERISA, which permits normal retirement age to be as late as the later of attainment of age 65 or the 5th anniversary of plan entry, requires that people be treated as fully vested upon attainment of Normal Retirement Age.

While it can definitively be stated that this participant is not 100% vested as a result of attainment of normal retirement age, the answer can only be determined by looking at the plan's vesting and early retirement provisions. If the plan defines early retirement eligibility as attainment of age 55 (with no service requirement) or termination of employment within 10 years of normal retirement date (again, with no service requirement) or if the plan provides full and immediate vesting or full vesting upon attainment of age 65 (with no service requirement), then the person would be 100% vested. If there is a 10 years of service requirement for early retirement and vesting is a straight 5-year cliff schedule, then the person would probably be 0% vested.

[david rigby]

Absent the early retirement issued mentioned, the facts presented would produce vesting at 1/1/2017 if still employed. It appears the EE severed employment before becoming vested, so he/she is no longer a participant. Vesting will not occur at 1/1/17 unless this person is rehired.

(Possible that TH vesting also applies?)

P.S. You do not provide hire date, or whether this EE may have worked somewhere else in the controlled group, so I'm assuming that is not relevant. Such employment could add vesting service prior to Entry Date. For example, if hire date = 1/15/2011 (and EE worked 1000+ hours in 2011), then vesting might occur prior to 2017, but he/she must be employed.

[John Feldt ERPA CPC QPA]

Their normal retirement age (later of age 65 or the 5th anniversary), 1-1-2017, was not reached before they left employment (they resigned in 2014).

Thus, they can only become 100% vested on 1-1-2017 IF they are employed at that time or rehired later, unless the plan has other provisions that would vest them earlier.

[cheersmate]

Thank you everyone.

The participant did resign in 2014... therefore is not vested.

FYI, the Plan excludes service prior to its Effective Date (1/2012).

[There was no previous employment to consider with an affiliate who may have sponsored a Plan]