retroactive vesting increase

My client is a dentist and he wants to reduce vesting hours for a year of vesting credit retroactively to make a couple part time hygienists happier.   He will be selling the practice soon and he wants to keep them around until then.  Once he sells, he will then make everyone 100% (even terms).

When I went to restate the plan to reduce vesting hours from 1000 to 500, I didn't have the option to put in a retroactive effective date.  Do you think it is ok to drop hours for vesting and bump up the % for the part timers?  This hasn't affected anyone who has been previously paid out in the last 6 years that I am aware of.

I'm not sure about reducing hours requirement for vesting retroactively.  But maybe amend the plan now to provide 100% vesting immediately... should help to keep them around... especially since he plans to sell the practice soon, and assuming he terminates the plan, they will have to be 100% vested anyway.  And sounds like he wants to fully vest everyone when he sells the practice.  Note that selling the practice doesn't require 100% vesting... but terminating the plan requires 100% vesting...depends on the how the practice is sold.

Pixie, I do not know about the limitations of your software, but it's really not retroactive. You don't have to do it by changing the vesting requirement, you can just amend the plan to say that a certain group of employees, or named individuals, has/have a higher vested percentage, as long as they are non-HCEs. If some are HCEs (which seems unlikely on your facts), then you need to be concerned that the amendment is nondiscriminatory.

chc93 may have the easiest method.  If dentist sells practice, it's likely to be an asset sale and winding down of the entity that is currently sponsoring the plan...thus terminating the plan.  If the dentist doesn't wind down the entity, they would still likely term the plan as there would be no more employees associated with the entity.  Either  would fully vest all participants.  Now that doesn't help the dentist satisfy the employees if he doesn't want the employees to know about a possible sale until it happens.  

Don't forget to look at the big picture:  The dentist (ie, the boss) might get some value (eg, happy EEs) by simultanelusly announcing the sale and saying, "for those of you who are not already 100% vested in our plan, you now are 100% vested".  This should be true even if the vesting occurred via amendment and the sale takes place a few weeks later.