411 Vesting Flashcards
What is the required Vesting Schedule for Employee Contributions.
Always 100% Vested.
What is the required Vesting Schedule for Employer Contributions under the Plan?
5 Year Cliff Vesting or 20% @ 3, 40% @ 4, 60% @ 5, 80% @ 6, 100% @ 7
What is the required Vesting Schedule for Employer Contributions under a DC Plan?
3 Year Cliff Vesting or 2 to 6 year graded vesting
When are account forfeitures permitted?
- Death (excluding QPSA)2. Suspension of Benefit during reemployment3. Retroactive Plan Amendments4. Withdrawal of mandatory employee contributions if less 50% vested, but must restore if paid back with interest (can be conditioned on paying back within a timeframe).
For Vesting Service, what years may be ignored?
- Years before age 182. If employee declined to contribute to a plan requring employee contributions3. Years which the plan or predecessor plan was not active4. Years excluded due to Break in ServiceLess Tested7. Multiemployer Plans - Years after complete or partial withdrawal. or termination
What is a Predecessor Plan?
A predecssor plan is a plan that is terminated within 5 years (either way) of a new plan starting.
Definition of a 1 Year Break in ServiceNote: Maternity
A 12-consecutive month period of service which the participant completes less than 501 hoursPaternity/Maternity Leave - get up to 501 hours (to avoid BiS) in either year of absence or following year. Hours are only used to determine if BiS occured.
How does Breaks-In-Service affect vesting?
- Years before BIS don’t have to be counted for vesting until ptp completes 1 year
- Non-vested ptps: Can ignore vesting service prior to 5 years
What is the normal retirement age of a plan?
Earlier of1. Plan’s NRA2. Age 65 and 5 Years of Participantion Service
What is a reasonable assumption for the NRA?
In general it should be based on the retirement rates observied in an industry.1. Assumed ok if >=622. 55-62 then based on facts of the circumstance3. =50 for Public Safety (e.g. Firefighters) is assumed ok
What are the 2 conditions to change the vesting schedule?
- Can not decrease the vesting percentage of any employee2. Employees with >= 3 years of service can elect to stay on old vesting schedule
What benefits can be forcibly cash out of a plan? (Threshold, basis, any benefits excluded?)
Benefits less than or equal to 5,000 excluding roll over contributions and determined wrt 417(e)(3)
What is the required Cash Balance Vesting Scale?
100% at 3 years
What is a Cash Balance Plan?
Plan where accrued benefit is a hypothetical account balance or a percentage of a participant’s final average earnings.
When does a partial termination occur?
It depends on the facts of the situation, but generally occurs when plan turnover is >= 20%For a DB plan, there is a special reul under 1.411(d)-2 that if a plan cuts benefit accruals and a reversion occurs or increases, a partial term has occurred.
