[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.411(a)-8]

[Page 603-604]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.411(a)-8  Changes in vesting schedule.

    (a) Requirement of prior schedule. Under section 411(a)(10)(A), for 
plan years for which section 411 applies, a plan will be treated as not 
meeting the minimum vesting standards of section 411(a)(2) if the plan 
does not satisfy the requirements of this paragraph. If the vesting 
schedule of a plan is amended, then as of the date such amendment is 
adopted, the plan satisfies the requirements of this paragraph if, under 
the plan as amended, in the case of an employee who is a participant 
on--

    (1) The date the amendment is adopted, or

    (2) The date the amendment is effective, if later.


The nonforfeitable percentage (determined as of such date) of such 
employee's right to his employer-derived accrued benefit is not less 
than his percentage computed under the plan without regard to such 
amendment.
    (b) Election of former schedule--(1) In general. Under section 411 
(a)(10)(B), for plan years for which section 411 applies, if the vesting 
schedule of a plan is amended, the plan will not be treated as meeting 
the minimum vesting standards of section 411 (a)(2) unless the plan as 
amended, provides that each participant whose nonforfeitable percentage 
of his accrued benefit derived from employer contributions is determined 
under such schedule, and who has completed at least 5 years of service 
with the employer, may elect, during the election period, to have the 
nonforfeitable percentage of his accrued benefit derived from employer 
contributions determined without regard to such amendment. 
Notwithstanding the preceding sentence, no election need be provided for 
any participant whose nonforfeitable percentage under the plan, as 
amended, at any time cannot be less than such percentage determined 
without regard to such amendment.

[[Page 604]]

    (2) Election period. For purposes of subparagraph (1) of this 
paragraph, the election period under the plan must begin no later than 
the date the plan amendment is adopted and end no earlier than the 
latest of the following dates:
    (i) The date which is 60 days after the day the plan amendment is 
adopted,
    (ii) The date which is 60 days after the day the plan amendment 
becomes effective, or
    (iii) The date which is 60 days after the day the participant is 
issued written notice of the plan amendment by the employer or plan 
administrator.
    (3) Service requirement. For purposes of subparagraph (1) of this 
paragraph, a participant shall be considered to have completed 5 years 
of service if such participant has completed 5 years of service, whether 
or not consecutive, without regard to the exceptions of section 
411(a)(4) prior to the expiration of the election period described in 
subparagraph (2) of this paragraph. For the meaning of the term ``year 
of service'', see regulations prescribed by the Secretary of Labor under 
29 CFR Part 2530, relating to minimum standards for employee pension 
benefit plans.
    (4) Election only by participant. The election described in 
subparagraph (1) of this paragraph is available only to an individual 
who is a participant in the plan at the time such election is made.
    (5) Election may be irrevocable. A plan, as amended, shall not fail 
to meet the minimum vesting standards of section 411(a)(2) by reason of 
section 411(a)(10)(B) merely because such plan provides that the 
election described in subparagraph (1) of this paragraph is irrevocable.
    (6) Relationship with section 411(a)(2). The election described in 
subparagraph (1) of this paragraph is available for a vesting schedule 
which does not satisfy the requirements of section 411(a)(2) only if 
under such schedule all participants have a 50 percent nonforfeitable 
right after 10 years of service, and a 100 percent nonforfeitable right 
after 15 years of service, in their employer-derived accrued benefit. If 
the vesting schedule provides less vesting than the percentages required 
by the preceding sentence, the plan can be amended to provide for such 
vesting.
    (c) Special rules--(1) Amendment of vesting schedule. For purposes 
of this section, an amendment of a vesting schedule is each plan 
amendment which directly or indirectly affects the computation of the 
nonforfeitable percentage of employees' rights to employer-derived 
accrued benefits. Consequently, such an amendment, for example, includes 
each change in the plan which affects either the plan's computation of 
years of service or of vesting percentages for years of service.
    (2) Aggregation of amendments. All plan amendments which are: (i) 
amendments of a vesting schedule within the meaning of subparagraph (1) 
of this paragraph and (ii) adopted and effective at the same time, shall 
be deemed to be a single amendment for purposes of applying the rules in 
paragraphs (a) and (b) of this section.

(Sec. 411 (88 Stat. 901; 26 U.S.C. 411))

[T.D. 7501, 42 FR 42333, Aug. 23, 1977]