There have been a lot of reminders about the vesting changes for non-elective contributions made by the Pension Protection Act. Today, in reviewing the cash balance design requirements contained in Section 701 of PPA, I was reminded about the change in vesting requirements for cash balance plans.
In Notice 2007-6, the IRS clarified that Section 701 of the Pension Protection Act requires that statutory hybrid plans provide an employee who has completed at least 3 years of service with a nonforfeitable right to 100 percent of the employee’s accrued benefit derived from employer contributions. The term “statutory hybrid plan” means a cash balance plan, pension equity plan (PEP) or other hybrid defined benefit plans.
This requirement for vesting is generally effective on or after June 29, 2005. For plans in existance on June 29, 2005, the change to the 3-year cliff vesting schedule is effective for plan years beginning on or after January 1, 2008.
More tomorrow about the design requirements for cash balance plans contained in Section 701 of PPA. [tags]Pension Protection Act, defined benefit, cash balance, hybrid plan, plan design, vesting, pension, ppa[/tags]
