Different Vesting Rules Within Plan

[Fielding Mellish]

Defined benefit plan governed by ERISA.  Currently, an employee becomes a participant in the Plan once he/she works "x" hours in a year.  Once he/she is a participant, he/she gets a Year of Vesting Credit for each year that he/she works "y" hours.

Can the Plan be amended to say that, after the effective date of the amendment, any new employee must work "a" hours in a year (with "a" being more than "x"), and then that employee must earn "b" hours each year to get a Year of Vesting Credit (where "b" is more than "y")?

In other words, can a plan be amended to require more hours to become a participant and get a year of vesting credit for new employees while still keeping the old rules for current employees?

Thanks.

[Lou S.]

I'm going to assume that "a" and "b" are both values that satisfy the IRS rules.

In the first - you can change the eligibility. Your amendment should be clear whether or not participants who satisfied the old rule continue to be participants after the amendment or if they need to meet the new rule. Both are acceptable as eligibility is not a protected benefit.

In the second I'm sure it can be done I've just never quite seen this exact question. I think I would treat it like a change in vesting schedule. That is preserve any vesting accrued though date of amendment and allow employees with 3 years of service to choose which schedule. Though I'm not 100% sure on this reading of the rule.