Guest benefitsanalyst Posted March 30, 2001 Posted March 30, 2001 If a company is laying off more than 20% of its workforce, is there any requirement to immediately vest everyone under the 401(k) Plan? We have a discretionary match and a graded vesting schedule.
Guest S FISCHER Posted March 30, 2001 Posted March 30, 2001 Page 4.78 of the 1999-2000 Erisa Outline Book states "Where the reduction is under 50%, but over 20%, the IRS may be willing to consider mitigating facts and circumstances. However, it is recommended an employer seek a determination letter on the partial termination (see Form 5300) if it is unwilling to accelerate vesting after a reduction involving more than 20% of the participants."
RCK Posted March 30, 2001 Posted March 30, 2001 Assuming that you do have a partial termination, you only have to 100% vest the affected participants--those who separated from service as a result of the action. You do NOT have to vest those people whose jobs and /or participation were not affected. rck
david rigby Posted March 30, 2001 Posted March 30, 2001 Several earlier discussions. Start here. http://benefitslink.com/boards/index.php?showtopic=8952 I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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