Vesting in 403(b) plan, 3-year 100 percent

I worked for a non-profit hospital with an ERISA 403(b) Retirement Plan from 06/29/2020 to 07/10/2023.

The employer does not want to vest the total amount in my plan. They say that:

-       In 2020, I worked 968 hours

From 06/29/2020 to 12/31/2020 I worked more than 1,000 hours, but hours worked during the last 11 days of the year were paid in the first paycheck of 2021.

-       In 2021, I worked 1,647 hours

-       In 2022, I worked 1,931 hours

-       In 2023, I worked 762 hours

The SPD for the 403(b) Employee Retirement Plan says:

“Year of Service means a payroll calendar year during which you are credited for at least 1,000 hours of service. For this purpose, an “hour of service” generally means any hour for which you are paid for working for Baptist Health, including payment for vacation, holiday and paid time off hours.”

Regarding vesting:

My question is: How are the years of service calculated in this particular case?

§ 2530.203-2 Vesting computation period.

(a) Designation of vesting computation periods. Except as provided in paragraph (b) of this section, a plan may designate any 12-consecutive-month period as the vesting computation period. The period so designated must apply equally to all participants. This requirement may be satisfied even though the actual 12-consecutive-month periods are not the same for all employees (e.g., if the designated vesting computation period is the 12-consecutive-month period beginning on an employee's employment commencement date and anniversaries of that date). The plan is prohibited, however, from using any period that would result in artificial postponement of vesting credit, such as a period meassured by anniversaries of the date four months following the employment commencement date.

(b) Plans with 3-year 100 percent vesting. For rules regarding when a participant has a nonforfeitable right to his accrued benefit, see section 202(a)(1)(B)(i) of the Act and section 410(a)(1)(B)(i) of the Code and regulations issued thereunder.

Dig deep into the document's definition of an hour of service - there may be language stating the Plan Administrator's records may be allowed to be kept in such a way that they track it pay period to pay period based on the dates paid, rather than actually worked as a matter of uniformly-applied convenience.

But absent anything like that, you should make a claim for benefits as your SPD allows you to based on your records.

I just read your answer. I appreciate your response because it has not been easy for me to find an expert. I called the Department of Labor, and after several months, they basically told me that the employer could set the rules they wanted. I think minimal standards are set by the law, but I do not understand everything the law says.

As I mentioned in my previous post, the SPD for the 403(b) Employee Retirement Plan states, "Year of Service means a payroll calendar year during which you are credited for at least 1,000 hours of service. For this purpose, an “hour of service” generally means any hour for which you are paid for working for Baptist Health, including payment for vacation, holiday, and paid time off hours."

In another part of the SPD, regarding ELIGIBILITY FOR EMPLOYER CONTRIBUTIONS, they mention "payroll calendar year" again and explain between parenthesis, "i.e., for pay dates during the calendar year." Can they just count hours paid in the calendar year instead of hours worked in that year?

Rereading the SPD, I noticed that:

• The plan has "automatic enrollment."
• The plan "intends to operate the Plans as self-directed individual account plans within the requirements of ERISA Section 404(c) and regulations under Section 404(c) established by the U.S. Department of Labor."

I think there are special vesting rules for matching contributions under these conditions. Am I right?

I would appreciate any help. I will gladly pay if you or somebody you know can read the SPD and check if there is any way I could contest their decision not to vest me. I have been unable to find a lawyer specializing in employee benefits. The SPD is attached.

Thank you!

SPD Baptist Health 403(b) Retirement Plan.pdf