ERISA Outline Book Index: V

VACATION BENEFITS

  • * Contribution by employer of value of employeeís unused vacation time, at employeeís election, was not cash or deferred arrangement (CODA), 1A.61
  • * Deferral of compensation attributable to paid time off (PTO) plans, see PTO PLANS

VALUATION

  • * Allocation of earnings under a defined contribution plans, 3A.181
  • * Annual valuation of defined contribution plan required at minimum, 3A.181
  • * Earnings in defined contribution plan: allocation to account balances, see ACCRUAL OF BENEFITS

VCGROUP PROCEDURE FOR RESOLVING QUALIFICATION FAILURES, see PLAN DISQUALIFICATION

VCO PROCEDURE FOR RESOLVING QUALIFICATION FAILURES, see PLAN DISQUALIFICATION

VCR, see PLAN DISQUALIFICATION

Note: VCR has been redesignated as VCO and VCS submissions under EPCRS

VCS PROCEDURE FOR RESOLVING QUALIFICATION FAILURES, see PLAN DISQUALIFICATION

VCSEP PROCEDURE FOR RESOLVING QUALIFICATION FAILURES UNDER SEPs, see PLAN DISQUALIFICATION

VEBA, see EMPLOYEE BENEFIT PLAN(Welfare benefit plan)

VENUE FOR ERISA LAWSUIT, see ENFORCEMENT OF ERISA

VERTICALLY INTEGRATED BUSINESSES, see QSLOB RULES

VESTED, see VESTING RULES

VESTING RULES

  • * Accrual requirements for defined benefit plans (IRC §411(b)), see ACCRUAL OF BENEFITS
  • * Acquired employees: crediting service with former employer, 4.66
  • * Amending the vesting schedule, see Vesting schedules below
  • * Anti-cutback rule protecting accrued benefits and optional forms of benefit (IRC §411(d)(6)): interaction with vesting requirements, 4.30, 4.32, 6.165
    Also see ANTI-CUTBACK RULE
  • * Break in service
    • - Definition, 4.78
    • - Elapsed time method, 4.80
    • - Five-year break in service rule, 4.91
      • ♦ Breaks must be consecutive, 4.91
      • ♦ Defined benefit plans cannot use this rule except for fully-insured plans, 4.92
      • ♦ Forfeiture triggered at end of 5-year break period, 4.92
    • - FMLA leave, 4.79
    • - Maternity/paternity leave rule, 4.78
    • - Measuring the break in service, 4.80
    • - One-year break in service rule (postponing credit for prior service), 4.82
      • ♦ Measuring additional year of service, 4.82
      • ♦ Temporary disregarding of service until additional year completed, 4.82
      • ♦ Vesting of accrued benefits before break not affected, 4.85
    • - Operation of break in service rules, 4.82
    • - Rule of parity, 4.86
    • - Termination of employment not necessary to incur break in service, 4.80
  • * Cash-out distribution
    • - Basis for tax purposes generated from repayment of cash-out distribution, 7.41
    • - Consent requirements, 4.93
    • - “Deemed” cash-outs of zero percent vested participants, 4.98
    • - Distribution must be “due to” employeeís termination of participation in plan, 4.94
    • - Elective deferrals: treatment under cash-out rules, 4.100
    • - Forfeiture triggered by cash-out distribution, 4.94
    • - Optional forms of benefit must be restored if repayment made, 4.99
    • - Repayment of cash-out distribution, 4.96
      • ♦ Defined benefit plan, 4.97
      • ♦ .Defined contribution plan, 4.96
    • - Requirements for cash-out distribution, 4.93
    • - Section 415 limits: treatment of cash-out repayments, see SECTION 415 LIMITS
    • - Vesting rights already established not affected by cash-out forfeiture, 4.99
    • - When is distribution “on account of” termination of participation, 4.94
    • - Zero percent vested participant may be cashed-out through a “deemed” cash-out distribution, 4.98
  • * Church plans exempt from vesting rules if they are nonelecting church plans, 4.136
  • * Complete discontinuance of profit sharing contributions, see Plan termination below
  • * Consent requirements for certain distributions (IRC §411(a)(11)), see DISTRIBUTIONS
  • * Davis-Bacon contributions might have separate vesting schedule, 4.27
  • * Death of participant might result in forfeiture, see Forfeiture below
  • * Deemed IRA accounts must be 100% vested at all times, 4.16
  • * Defined benefit plans: vesting requirements, 4.4
  • * Defined contribution plans: vesting requirements, 4.9
  • * Discontinuance of profit sharing contributions, see Plan termination below
  • * Distributions
    • - Cash-out distribution, see Forfeiture below
    • - Special vesting formulas required if cash-out not used, 4.20, 4.101
  • * Early retirement provision might be vesting event, 6.291
  • * Elapsed time method of determining vesting, 4.52, 4.85
    • - Some absences treated as periods of service (“service spanning rule”), 4.53
  • * Elective deferrals, see Section 401(k) plans below
  • * Eligibility service separately determined from vesting service, 4.75
  • * Employee contributions must be vested at all times, 4.17, 4.111
    • - Determining employee-derived benefit under defined benefit plan, 4.112
    • - Determining employee-derived benefit under defined contribution plan, 4.111
  • * ESOPs
    • - ESOP dividends reinvested by employee election must be 100% vested, 4.19
  • * Exclusion of certain service for vesting purposes, 4.54
    • - Age 18: exclusion of service earned before age 18, 4.60
    • - All service counts as general rule, 4.54
    • - Break in service rules, service excluded under, see Break in service above
    • - Contributory plan: service excluded for period employee fails to contribute, 4.60
      • ♦ Section 401(k) plans are not contributory plans for purposes of this rule, 4.61
    • - Predecessor plan: service earned under predecessor plan may not be excluded, 4.55
    • - Service before the effective date of the plan may be disregarded, 4.55
      • ♦ Service earned while predecessor plan maintained canít be disregarded, 4.55
  • * Exemption from vesting rules for certain plans, 4.136
  • * FMLA leave, see Break in service above
  • * Forfeitures
    • - Allocation of under defined contribution plan, see ACCRUAL OF BENEFITS
    • - Cash-out distribution triggers forfeiture, see Cash-out distribution above
    • - Death of participant may result in forfeiture, 4.103, 6.478
    • - Defined benefit plans: treatment of forfeitures, see ACCRUAL OF BENEFITS
    • - Definition of forfeiture, 1A.230
    • - Excess vesting may be forfeited, 4.105
    • - Expenses of plan paid with forfeitures, 3A.176
    • - Five-year break in service rule creates a forfeiture event, 4.91
    • - Forfeiture for cause, 4.105
    • - Improper forfeitures: correction methods, 15.693
    • - Lost or missing participants/beneficiaries: might forfeit benefits, 4.106
    • - Matching contributions: forfeiture of match under certain circumstances, 4.104
      Also see SECTION 401(m) PLANS
    • - Multiemployer plans: special forfeiture rules, 4.108
    • - Permissible withdrawals (IRC §414(w)) from an eligible automatic contribution arrangement: forfeiture of related match, 6.288
    • - Reduction of benefits to satisfy nondiscrimination requirements under defined benefit plan, 4.107
    • - Retroactive amendment to reduce pension obligation because of business hardship, 4.105
    • - Suspension of benefits rule under defined benefit plan forfeits right to value of missed payments, 4.107
      • ♦ Addition or modification of suspension of benefit rule (Central Laborersí case), 6.165
      • ♦ Not applicable to actuarial increases required under IRC §401(a)(9)(C), 4.107
    • - Withdrawal of mandatory contributions may result in forfeiture under certain circumstances, 4.108
    • - Zero percent vested participant may be cashed-out, 4.98
  • * Forfeiture for cause, see Forfeiture above
  • * Governmental plans exempt from vesting rules, 4.136
  • * "Grossed up" vesting, see Special vesting formulas below
  • * Hypothetical vesting formulas, see Special vesting formulas below
  • * Leased employees: crediting vesting service, 4.73
  • * Lost or missing participants/beneficiaries, see Forfeiture above
  • * Mandatory contributions: withdrawal might affect vesting rights, see Forfeiture above
  • * Matching contributions: top heavy vesting rules apply to all matching contributions made in post-2001 plan years, even if plan is not top heavy, 4.12
    • - May apply accelerated vesting to pre-2002 matching contributions, too, 4.12
  • * Maternity/paternity leave rule, see Break in service above
  • * Merger of plans
    • - Amendment to vesting schedule issues, 4.37
  • * Military service: crediting vesting service for period of absence, 4.89
  • * Multiemployer plans
    • - Forfeitures: special rules relating to multiemployer plans, 4.108
    • - Vesting schedules for multiemployer plans (pre-1999 plan years), 4.23
  • * Multiple employer plans
    • - Participating employers treated as single employer for vesting purposes, 4.74
  • * Nondiscrimination issues relating to vesting schedule, see NONDISCRIMINATION TESTING
  • * Nonelecting church plan exempt from vesting rules, 4.136
  • * Nonforfeitable, see Vested below
  • * Normal retirement age: definition, see NORMAL RETIREMENT AGE
  • * Normal retirement age: full vesting required, 4.17, 4.110
  • * Optional forms of benefit must be protected, see ANTI-CUTBACK RULE
  • * Partial termination
    • - Acquisition of employees, 4.128
    • - Affected employees in a partial termination situation, 4.120
    • - Amendment to plan may trigger partial termination (“horizontal” partial termination), 4.129
    • - Constructive discharge: effect on partial termination determination, 4.126
    • - Conversion of plan into another type of plan, 4.130
      • ♦ Conversion of money purchase plan into profit sharing plan: no vesting required on MP accounts, 4.130
    • - Definition of partial termination, 4.120
    • - Determination letter may be requested on whether there is a partial termination, 4.134
    • - Employer-initiated action required to create a partial termination, 4.122
    • - Freezing accruals, 4.131, 4.132
      • ♦ Complete discontinuance of profit sharing plan contributions treated as a termination, 4.119
      • ♦ Freezing a defined benefit plan, 4.132
      • ♦ Freezing a money purchase plan, 4.131
    • - Funding status of defined benefit plan is relevant, 4.127
    • - Horizontal partial termination, 4.129
    • - Involuntary employment terminations required to result in partial termination, 4.122
    • - Merger of plans, 4.133
      • ♦ Merger of money purchase plan into profit sharing plan: no vesting required on MP accounts, 4.133
    • - No corresponding ERISA requirement, 4.135
    • - Period of time for measuring whether a partial termination has occurred, 4.122
    • - Potential for discrimination due to plan amendment may cause partial termination, 4.130
    • - Potential for reversion due to plan amendment may result in partial termination, 4.129
    • - Rebuttable presumption of partial termination if at least 20% turnover by employer-initiated action, 4.121
    • - Reduction of money purchase contribution formula, 4.130
    • - Retroactive finding by IRS that partial termination had occurred, 4.135
    • - Significant reduction in participation results in partial termination, 4.120
      • ♦ Terminations of vested participants, as well as nonvested participants, taken into account, 4.121
      • ♦ Small plans at a disadvantage, 4.123
    • - Vesting required for employees “affected” by the partial termination, 4.120
  • * Plan termination results in 100% vesting, 4.114
    • - “Affected” employees, 4.114 (DC plans), 4.117 (DB plans)
    • - Discontinuance of profit sharing contributions, 4.119
      • ♦ Discontinuance of contributions under money purchase plan not treated as termination, 4.131
      • ♦ Treatment of 401(k) deferrals when determining whether a discontinuance of contributions has occurred, 4.119
    • - No corresponding ERISA requirement, 4.135
    • - Suspension of contributions under profit sharing plan, 4.119
      • ♦ Lack of profits valid reason for suspending contributions, 4.119
    • - Termination of plan coincident with liquidation of plan sponsor might not trigger vesting for former employees, 4.115
    • - When is a plan considered terminated? 4.118
  • * Predecessor plan: service earned under predecessor plan must be credited, 4.55
    • - SEP and SIMPLE-IRA plans not predecessor plans, 4.58
  • * Prior employer: service with prior employer must be credited under certain circumstances, 4.66
  • * Profit sharing plan: complete discontinuance of contributions results in vesting, see Plan termination above
  • * QSLOB designation does not affect vesting service credits, 4.65
  • * Re-employment
    • - Prior service may be disregarded under break in service rules, see Break in service above
  • * Related employer: service credited as if related group were one employer, 4.64
    • - QSLOB designation does not affect service credits, 4.65
  • * Section 401(k) plans
    • - Cash-out rules: treatment of elective deferrals, 4.100
    • - Exception that allows no crediting of service in years employee fails to contribute not applicable to 401(k) plan, 4.61
    • - Elective deferrals must be vested at all times, 4.17, 4.111
    • - Rule of parity: treatment of elective deferrals, 4.86
    • - Safe harbor 401(k) plans: vesting requirements, 4.17, 11.545
    • - Vesting rules applied separately to non-401(k) employer contributions in pre-2006 years, 4.112
      • ♦ Regulations effective in 2006 require vesting rules (other than vesting schedules) to apply to account as a whole, 4.100, 4.112
  • * Section 403(b) plans: nonforfeitability requirement for annuity contract/custodial account, 16.16
  • * Special vesting formulas required if distribution (other than cash-out) made before 5th break, 4.20
    • - Circumstances under which use of these formulas might arise, 4.23
    • - Defined benefit plans not subject to this rule, 4.23
    • - Examples illustrate differences between the two regulatory formulas, 4.22
  • * Suspension of benefits rule under defined benefit plan, see Forfeiture above
  • * Termination of employment
    • - Not forfeiture event, 4.77
    • - Vesting determined at termination, 4.76
  • * Title I of ERISA minimum vesting standards, 13A.601
  • * Top heavy plans: special vesting schedules, see Vesting schedules below
  • * Two-year eligibility plan must provide 100% vesting, 4.24
  • * Uniformed Services Employment and Reemployment Rights Act of 1994, see Military service above
  • * “Vested” defined, 1B.425, 4.2
  • * Vesting computation period, see Year of service for vesting purposes below
  • * Vesting schedules, 4.4
    • - Alternatives to statutory schedules (more liberal rules permitted), 4.25
    • - Amending the vesting schedule, 4.28
      • ♦ Central Laborersí case from Supreme Court: regulations interpret application of case to amendments to vesting rights, 4.30, 4.32, 6.165
      • ♦ Definition of amendment to vesting schedule, 4.42
      • ♦ Election to stay on old schedule, 4.31
        • Election period, 4.31
        • Exception if new schedule better at all points, 4.32
        • Three years of service required to get election rights, 4.31
        • What if old schedule was better? 4.36
      • ♦ Elective transfers between DC plans due to business transaction or employment status change, 4.39
      • ♦ Merger transactions, 4.37
      • ♦ Normal retirement age increase due to law change not treated as amendment to vesting schedule, 4.43
      • ♦ One hour of service credited after new schedule becomes effective, 4.45
      • ♦ Regulations require protection of future increases under old schedule with respect to accrued benefits, 4.32
      • ♦ Protection of vesting percentage, 4.28
        • ERISA Conference Report explanation, 4.29
        • IRS interpretation, 4.28
      • ♦ Separate vesting schedules for different contribution sources, 4.38
      • ♦ Shift to or from top heavy schedule treated as amendment, 4.44
      • ♦ Statutory changes that require amendments to planís vesting schedule, 4.40
    • - Application of vesting percentage to accrued benefits, 4.25
    • - Defined benefit plans: statutory schedules, 4.4
      • ♦ Cash balance plans and other statutory hybrid plans are subject to 3-year vesting schedule, 4.5
        • Effective date rule for plans in existence on June 29, 2005, 4.7
      • ♦ Eligible combined plans (“DB-K”): DB component requires full vesting within 3 years, 3A.263, 4.8
      • ♦ Five-year cliff vesting, 4.4
      • ♦ Multiemployer plans: special vesting rule (pre-1999 years), 4.23
      • ♦ Seven-year graded, 4.4
      • ♦ Top heavy defined benefit plans subject to accelerated vesting, 4.5
    • - Defined contribution plans: statutory schedules, 4.9
      • ♦ Defined contribution plans subject to top heavy vesting in post-2006 years, regardless of top heavy status due to PPA 2006, 4.9
        • Applied to matching contributions after 2001, 4.12
        • Pre-2007 nonelective contributions may be subject to non-top-heavy schedules, 4.10
        • Pre-2002 matching contributions may be subject to non-top-heavy schedules, 4.12
      • ♦ Shift to or from top heavy schedule (pre-2007 years; certain pre-2007 contributions), 4.14, 4.44
      • ♦ Six-year graded, 4.9
      • ♦ Three-year cliff, 4.9
    • - Plan design considerations in shifting schedules, 4.14
    • - Special vesting formulas required if distribution (other than cash-out) made before 5th break, 4.20
    • - Top heavy plans: statutory schedules, 4.14
      • ♦ Defined contribution plans subject to top heavy vesting in post-2006 years, regardless of top heavy status, 4.9
        • Applied to matching contributions after 2001, 4.12
      • ♦ Not an ERISA requirement to provide top heavy vesting, 4.14
      • ♦ Shift to or from top heavy schedule, 4.44
        • Applies to employee with at least one hour of service after shift is effective, 4.44
      • ♦ Six-year graded, 4.9, 4.14
      • ♦ Three-year cliff, 4.9, 4.14
  • * Year of service for vesting purposes
    • - Break in service: measuring year of service following a break in service period, 4.82
    • - Continuous employment not required, 4.51
    • - Definition of year of service, 4.46
    • - Elapsed time method of crediting, 4.52
    • - Service that may be excluded, see Exclusion of certain service for vesting purposes above
    • - Vesting computation period to measure year of service, 4.46
      • ♦ Amendment of vesting computation period, 4.50
      • ♦ Initial short year, 4.48, 4.50

VESTING SCHEDULES, see VESTING RULES

VOLUNTARY COMPLIANCE RESOLUTION (VCR) PROGRAM, see PLAN DISQUALIFICATION

VOLUNTARY FIDUCIARY CORRECTION (VFC) PROGRAM

  • * Application procedures, 13B.727
  • * Cannot be under investigation, 13B.726
  • * Conditions for relief, 13B.725
  • * Corrective action, 13B.734
  • * Correction amount defined, 13B.734
  • * Eligibility requirements, 13B.726
  • * ERISA §502(l) penalty relieved, 13B.732
  • * Explanation of program, 13B.724
  • * Fiduciary breaches covered by the program, 13B.731
    • - Table summarizing eligible transactions and corrective actions, 13B.801
  • * Mailing address for applications, 13B.730
  • * Scope of relief, 13B.732
  • * Waiver of excise taxes if certain prohibited transactions are corrected through VFC Program, 13B.96, 13B.731, 14.332

VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION (VEBA), see EMPLOYEE BENEFIT PLAN(Welfare benefit plan)

VOLUME SUBMITTER PLAN, see APPROVAL PROCESS

VOLUNTARY CONTRIBUTIONS, see EMPLOYEE CONTRIBUTIONS

VOTING PROXIES, see FIDUCIARY DUTY

VOTING RIGHTS, see EMPLOYER SECURITIES