In-Service Distribution - Protected Benefit

Let's say a plan has an in-service distribution option for matching and non-elective contributions. A plan previously did not require participants to be 100% vested to take an in-service distribution from these sources. Can a plan be amended to allow in-service from these sources only if the participant is 100% vested?

Thanks!

Without checking, my answer is "I don't think so".  They have a right that you are taking away with this change if they are not 100% vested.  That right is a protected right.  I don't see how you can come up with any other answer, but I have not researched to see if there are any "outs" on this.

Sort of. You have to preserve the right the accounts at the time of the amendment. So you could potentially have an accounting headache for the next couple of years as the value of partially vested account in-service distributions at the time the amendment is executed must be preserved. Effectively after the term of the vesting schedule you'd have the amendment you want.

And the question is always is it the dollar amount at the time of the amendment or the vested percentage at the time of the amendment that is protected. We go with the vested percentage; and yes, over time, as new people come in and as the old ones reach 100% vesting, the issue does eventually merge to what the amendment has provided.