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Posted

An employee was recently moved from a foreign entity to the US entity of the same company that sponsors a 401(k).  They are a resident non-citizen with US income now.

Should the original hire date form the foreign entity be used for crediting service for vesting? Or the date that they moved to the US and began employment with the US entity?

The plan document is mum on the topic; no provisions that state how to credit service based on service at the foreign entities. The plan has immediate entry but ER contributions have a vesting schedule.

Thank you in advance.

Posted

I'm sure the plan has the required language that all service with the "employer" counts and then says for such purpose that employer means all employers required to be aggregated under Code Section .... (control group and affiliated service group rules) - there's your answer. 

Think in the other direction - I work for my US-based company for three years, am 40% vested and then transfer to a subsidiary based in Canada or Mexico or wherever. Am I terminated and eligible for a distribution? I don't think so, and so my vesting service shouldn't stop either.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

Posted

I agree with CuseFan and I'll add that your plan probably has a section describing what happens when an employee transfers from an ineligible classification to an eligible one. That section is more than likely going to say that they become a participant on the date that they transfer to an eligible classification, provided they have satisfied the age and service requirements with the employer as of that date.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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