Vesting applicable to QACA SHNE changing to traditional SHNE

Plan wants to amend to remove the AE feature of the QACA SHNE and change to traditional SHNE. Will the vesting schedule still apply to those SHNE contributions already made under the QACA SHNE provision?

What does your amendment say?

I'm pretty sure you can set up separate sources and have the QACA safe harbor follow that vesting schedule and the traditional SHNE follow the 100% immediate if that's what client wants.

On 12/23/2020 at 12:47 PM, Robin Wilson said:

Plan wants to amend to remove the AE feature of the QACA SHNE and change to traditional SHNE. Will the vesting schedule still apply to those SHNE contributions already made under the QACA SHNE provision?

Yes, and you do not have to worry about a BRF issue under the 1.401(a)(4) Treasury Regulations.

The vesting regulations are so very old that they don't have (to my knowledge) provision specifying how they apply to a defined contribution plan with various contribution sources:  elective deferrals, match, employer nonelective, QMAC / QNEC, safe harbor contributions, and possibly further subdivisions as defined in the plan document.  On the other hand, we "know" (or at least its a universal consensus view) that one can have different vesting schedules to some extent for these contribution sources.

So I lean toward yes, that one can preserve the two-year cliff vesting schedule for QACA SHNE without having to switch it to a traditional SHNE.  I wish I could cite a regulation that gives me 100% confidence in the answer.

27 minutes ago, MWeddell said:

So I lean toward yes, that one can preserve the two-year cliff vesting schedule for QACA SHNE without having to switch it to a traditional SHNE.  I wish I could cite a regulation that gives me 100% confidence in the answer.

I agree, there is nothing directly on point in the Treasury Regulations, but different vesting schedules for different contribution sources is not a new concept, as you point out. 

And I would just like to mention that something allowed is not necessarily the smart move due to the administrative difficulties and potential for error.