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Code of Federal Regulations Pertaining to U.S. Department of Labor

Title 29  



Chapter XXV  

Pension and Welfare Benefits Administration, Department of Labor



Part 2530  

Rules and Regulations for Minimum Standards for Employee Pension Benefit Plans




Subpart B  

Participation, Vesting and Benefit Accrual

29 CFR 2530.203-2 - Vesting computation period.

  • Section Number: 2530.203-2
  • Section Name: Vesting computation period.

    (a) Designation of vesting computation periods. Except as provided 
in paragraph (b) of this section, a plan may designate any 12-
consecutive-month period as the vesting computation period. The period 
so designated must apply equally to all participants. This requirement 
may be satisfied even though the actual 12-consecutive-month periods are 
not the same for all employees (e.g., if the designated vesting 
computation period is the 12-consecutive-month period beginning on an 
employee's employment commencement date and anniversaries of that date). 
The plan is prohibited, however, from using any period that would result 
in artificial postponement of vesting credit, such as a period meassured 
by anniversaries of the date four months following the employment 
commencement date.
    (b) Plans with 3-year 100 percent vesting. For rules regarding when 
a participant has a nonforfeitable right to his accrued benefit, see 
section 202(a)(1)(B)(i) of the Act and section 410(a)(1)(B)(i) of the 
Code and regulations issued thereunder.
    (c) Amendments to change the vesting computation period. (1) A plan 
may be amended to change the vesting computation period to a different 
12-consecutive-month period provided that as a result of such change no 
employee's vested percentage of the accrued benefit derived from 
employer contributions is less on any date after such change than such 
vested percentage would be in the absence of such change. A plan 
amendment changing the vesting computation period shall be deemed to 
comply with the requirements of this subparagraph if the first vesting 
computation period established under such amendment begins before the 
last day of the preceding vesting computation period and an employee who 
is credited with 1,000 hours of service in both the vesting computation 
period under the plan before the amendment and the first vesting 
computation period under the plan as amended is credited with 2 years of 
service for those vesting computation periods. For example, a plan which 
has been using a calendar year vesting computation period is amended to 
provide for a July 1-June 30 vesting computation period starting in 
1977. Employees who complete more than 1,000 hours of service in both of 
the 12-month periods extending from January 1, 1977 to December 31, 1977 
and from July 1, 1977 to June 30, 1978 are advanced two years on the 
plan's vesting schedule. The plan is deemed to meet the requirements of 
this subparagraph.
    (2) For additional requirements pertaining to changes in the vesting 
schedule, see section 203(c)(1) of the Act and section 411(a)(10) of the 
Code and the regulations issued thereunder.
    (d) Service preceding a break in service. For purposes of applying 
section 203(b)(3)(D) of the Act and section 411(a)(6)(D) of the Code, 
(relating to counting years of service before a break in service for 
vesting purposes), the computation periods used by the plan in computing 
years of service before such break must be the vesting computation 
periods. (For application of the break in service rules, see section 
203(b)(3)(D) and section 411(a)(6)(D) of the Code and regulations issued 
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