[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(d)-3]

[Page 622-623]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.411(d)-3  Other special rules.

    (a) Class year plans--(1) General rule. Under section 411(d)(4), the 
requirements of section 411(a)(2) for a class year plan shall be deemed 
to be satisfied if such plan provides that each employee's rights to or 
derived from employer contributions on his behalf for any plan year are 
nonfor feitable no later than the end of the 5th plan year following the 
plan year for which such contributions were made. For purposes of 
section 411 and the regulations thereunder, the term ``class year plan'' 
means a profit-sharing, stock bonus, or money purchase plan which 
provides that the nonforfeitable rights of employees to or derived from 
employer contributions are determined separately for each plan year. 
``See Sec. 1.411(d)-5 for rules that apply to class year plans for 
contributions made for plan years beginning after October 22, 1986.''

[[Page 623]]

    (2) Other rules--(i) Prohibited forfeiture on withdrawals. In the 
case of a class year plan, section 401(a)(19) and the regulations 
thereunder shall be applied separately to each plan year.
    (ii) Distribution rules. The rules of Sec. 1.411(a)-7(d) apply to a 
class year plan. For example, under the rule in Sec. 1.411(a)-
7(d)(2)(ii)(D), a class year plan would be permitted to limit the time 
of repayment to a 5-year period beginning on the date of withdrawal, or 
under the rule in Sec. 1.411(a)-7(d)(2)(iii), a class year plan would 
restore the amount of the forfeited account balance in the event of 
repayment. For purposes of applying subparagraphs (2) and (3) of Sec. 
1.411(a)-7(d), relating to withdrawal of mandatory contributions, a 
withdrawal of employee contributions shall be treated as a withdrawal of 
such contributions on a plan year by plan year basis in succeeding order 
of time. Any repayments shall be treated as being on account of plan 
years in succeeding order of time. For purposes of applying any rule of 
such paragraph (e.g., paragraph (d)(2)(ii)(C)) the term ``one-year break 
in service'' means any plan year in which under subparagraph (1) of this 
paragraph a class year plan may forfeit an employee's rights.
    (iii) Computation of years for withdrawals. In applying the 
requirement of paragraph (a)(1) of this section that rights must be 
nonforfeitable no later than the end of the fifth plan year following 
the plan year for which contributions are made, any plan year for which 
there has been a withdrawal of contributions and no repayment of such 
contributions (determined as of the last day of the plan year) is not 
required to count toward the five years. For example, assume that 
contributions are made for A in 1981 to a calendar year plan. Under the 
general rule of paragraph (a)(1) of this section, the contributions must 
be nonforfeitable on December 31, 1986. If in 1982, A withdraws the 
contributions for 1981, and repays these contributions in 1984, 1982 and 
1983 are not required to be counted toward the five years because at the 
end of each year there is a withdrawal and no repayment of such 
withdrawal. Accordingly, the plan must provide that A's interest in the 
contribution for 1981 will be vested on December 31, 1988.
    (b) Prohibition against accrued benefit decrease. Under section 
411(d)(6) a plan is not a qualified plan (and a trust forming a part of 
such plan is not a qualified trust) if a plan amendment decreases the 
accrued benefit of any plan participant, unless the plan amendment 
satisfies the requirements of section 412(c)(8) (relating to certain 
retroactive amendments) and the regulations thereunder. For purposes of 
determining whether or not any participant's accrued benefit is 
decreased, all the provisions of a plan affecting directly or indirectly 
the computation of accrued benefits which are amended with the same 
adoption and effective dates shall be treated as one plan amendment. 
Plan provisions indirectly affecting accrued benefits include, for 
example, provisions relating to years of service and breaks in service 
for determining benefit accrual, and to actuarial factors for 
determining optional or early retirement benefits.
    (c) Rules applicable to section 414(k) plan. For special rules 
applicable to defined benefit plans which provide a benefit derived from 
employer contributions which is based partly on a participant's separate 
account, see section 414(k) and the regulations thereunder.

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

[T.D. 7501, 42 FR 42340, Aug. 23, 1977, as amended by T.D. 8038, 50 FR 
29375, July 19, 1985; T.D. 8219, 53 FR 31854, Aug. 22, 1988; 53 FR 
48534, Dec. 1, 1988]