[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)-5]

[Page 643-644]
 
                       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)-5  Class year plans; plan years beginning after October 22, 1986.

    (a) Plan years beginning prior to 1989. (1) The requirements of 
section 411(a)(2) shall be treated as satisfied in the case of a class-
year plan if such plan provides that 100 percent of each employee's 
right to or derived from the contributions of the employer on the 
employee's behalf with respect to any plan year is nonforfeitable not 
later than when such participant was performing services for the 
employer as of the close of each of 5 plan years (whether or not 
consecutive) after the plan year for which the contributions were made.
    (2) For purposes of paragraph (a)(1) of this section if--
    (i) Any contributions are made on behalf of a participant with 
respect to any plan year, and
    (ii) Before such participant meets the requirements of paragraph 
(a)(1) of this section, such participant was not performing services for 
the employer as of the close of each of any 5 consecutive plan years 
after such plan year, then the plan may provide that the participant 
forfeits any right to or derived from the contributions made with 
respect to such plan year.
    (3) This paragraph (a) applies to contributions made for plan years 
beginning after October 22, 1986.

[[Page 644]]

    (b) Plan years beginning after 1988. (1) The special class year 
vesting rule in section 411(d)(4) was repealed by section 1113(b) of the 
Tax Reform Act of 1986 (1986 Act). The repeal is generally effective for 
plan years beginning after December 31, 1988. See section 1111(e) of the 
1986 Act for a special effective date rule applicable to certain plans 
maintained pursuant to collective bargaining agreements.
    (2)(i) This subparagraph (2) provides a special rule for class year 
plans that were in compliance with section 411(d)(4) immediately before 
the first plan year beginning after section 411(d)(4) is repealed. These 
plans are not required to retroactively compute years of service under 
the general section 411(a)(2) rules. Instead, a participant must receive 
a year of service for each such prior plan year if the employee was 
performing services on the last day of such year. Similarly, if the 
participant was not performing services on the last day of such years, 
the participant will be treated as if a one-year break- in-service 
occurred for such plan year. This subdivision (i) applies to plan years 
to which this section applies.
    (ii) In the case of a plan year to which Sec. 1.411(d)-3 applied, a 
class year plan must compute years of service and breaks in service in a 
manner consistent with the rules in this paragraph (b)(2)(i), giving 
appropriate regard to the statutory changes made to section 411(d)(4).

[T.D. 8219, 53 FR 31854, Aug. 22, 1988; 53 FR 48534, Dec. 1, 1988]