PLANSPONSOR - August - September 2022 - 12

UPFRONT
Vesting May Be on the Verge
sponsors go with the QACA safe harbor
specifically because they can do two-year
cliff vesting, " he notes.
" If not forced to allow for immediate
vesting, most sponsors
choose
to subject participants to a vesting
schedule, " Droblyen continues. The
Employee Retirement Income Security
Act does require that plan sponsors limit
cliff vesting to three years of service, at
most, to become 100% vested, and graded
vesting has a six-year limit. " Employers
can definitely make their vesting rules
more liberal, if they choose, " he says.
Kristi Baker
and
her
colleagues
at CSi Advisory Services see a trend in
sponsors shortening their plan's vesting
period. In conversations with clients
about recruiting and retaining employees,
" one issue they're looking at is, 'Does a
six-year vesting schedule still make sense,
for the kind of employees we're trying to
attract?' " says Baker, managing partner in
the firm. Immediate vesting is rare, except
in safe harbor plans. " More commonly, we
see a move to a three- to four-year graded
vesting schedule. "
The shorter vesting period is more
attractive to some employees, Baker says.
Those applying for " more executive-level
positions or professional-level positions,
do look into those kind of details now. "
Vanguard's recent " How America
PERSONAL finance writers around
the U.S. have lately opined about how
employees should regard the vesting
schedule in their employer's defined
contribution retirement plan.
For workers in businesses with a
relatively short employee tenure, a longgraded
vesting schedule could appear
unfair to workers. But, for the plan
sponsor, the vesting schedule can control
costs and help with employee retention.
Safe harbor plans must follow some
clear vesting rules, but beyond that, sponsors
have considerable flexibility in structuring
their plan's vesting. " My book of
12 PLANSPONSOR.COM August - September 2022
business is probably skewed toward nonsafe-harbor
plans, " says Joe DeBello,
managing
consultant
at
OneDigital
Retirement + Wealth. " Therefore, the topic
of vesting is a constant in our discussions. "
The Rules
To qualify as a traditional safe harbor
plan requires immediate 100% vesting for
participants. A qualified automatic contribution
arrangement safe harbor plan with
automatic enrollment can have up to twoyear
cliff vesting, says Eric Droblyen, president
and CEO of Employee Fiduciary, a
third-party administrator. " Many times,
Art by Caroline Barlow
Saves " report found that, in 2021, nearly
half of plans immediately vested participants
in employer matching contributions,
and 25% of plans with an employer
match used a five- or six-year graded
schedule. The report covers 4.7 million
participant retirement accounts from
the 1,700-plus plans for which Vanguard
keeps records.
Usually
sponsors'
first
decision
about vesting is made in their choice of
plan design, says Jim Sampson, national
practice leader for Hilb Group Retirement
Services. If they choose other than a
safe harbor plan, the employer needs to
http://www.PLANSPONSOR.COM

PLANSPONSOR - August - September 2022

Table of Contents for the Digital Edition of PLANSPONSOR - August - September 2022

INSIGHTS
INDUSTRY ANALYSIS
RULES AND REGULATIONS
UPFRONT
Key Player
Ever Vigilant
Open Season
Simplify the Experience
Connecting One-on-One
The Cost of Protection
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - August - September 2022 - Cover1
PLANSPONSOR - August - September 2022 - Cover2
PLANSPONSOR - August - September 2022 - 1
PLANSPONSOR - August - September 2022 - INSIGHTS
PLANSPONSOR - August - September 2022 - 3
PLANSPONSOR - August - September 2022 - INDUSTRY ANALYSIS
PLANSPONSOR - August - September 2022 - 5
PLANSPONSOR - August - September 2022 - RULES AND REGULATIONS
PLANSPONSOR - August - September 2022 - 7
PLANSPONSOR - August - September 2022 - 8
PLANSPONSOR - August - September 2022 - 9
PLANSPONSOR - August - September 2022 - UPFRONT
PLANSPONSOR - August - September 2022 - 11
PLANSPONSOR - August - September 2022 - 12
PLANSPONSOR - August - September 2022 - 13
PLANSPONSOR - August - September 2022 - 14
PLANSPONSOR - August - September 2022 - 15
PLANSPONSOR - August - September 2022 - Key Player
PLANSPONSOR - August - September 2022 - 17
PLANSPONSOR - August - September 2022 - 18
PLANSPONSOR - August - September 2022 - 19
PLANSPONSOR - August - September 2022 - 20
PLANSPONSOR - August - September 2022 - 21
PLANSPONSOR - August - September 2022 - Ever Vigilant
PLANSPONSOR - August - September 2022 - 23
PLANSPONSOR - August - September 2022 - 24
PLANSPONSOR - August - September 2022 - 25
PLANSPONSOR - August - September 2022 - 26
PLANSPONSOR - August - September 2022 - 27
PLANSPONSOR - August - September 2022 - 28
PLANSPONSOR - August - September 2022 - 29
PLANSPONSOR - August - September 2022 - Open Season
PLANSPONSOR - August - September 2022 - 31
PLANSPONSOR - August - September 2022 - Simplify the Experience
PLANSPONSOR - August - September 2022 - 33
PLANSPONSOR - August - September 2022 - Connecting One-on-One
PLANSPONSOR - August - September 2022 - 35
PLANSPONSOR - August - September 2022 - The Cost of Protection
PLANSPONSOR - August - September 2022 - 37
PLANSPONSOR - August - September 2022 - FIDUCIARY FORUM
PLANSPONSOR - August - September 2022 - INSIDE ANGLE
PLANSPONSOR - August - September 2022 - PLAN PROFILE
PLANSPONSOR - August - September 2022 - Cover3
PLANSPONSOR - August - September 2022 - Cover4
https://www.plansponsordigital.com/plansponsor/august_september_2022
https://www.plansponsordigital.com/plansponsor/june_july_2022
https://www.plansponsordigital.com/plansponsor/excellenceawards_2022
https://www.plansponsordigital.com/plansponsor/april_may_2022
https://www.plansponsordigital.com/plansponsor/february_march_2022
https://www.plansponsordigital.com/plansponsor/december_2021_january_2022
https://www.plansponsordigital.com/plansponsor/october_november_2021
https://www.plansponsordigital.com/plansponsor/august_september_2021
https://www.plansponsordigital.com/plansponsor/june_july_2021
https://www.plansponsordigital.com/plansponsor/april-may_2021
https://www.plansponsordigital.com/plansponsor/february-march_2021
https://www.plansponsordigital.com/plansponsor/december-january_2021
https://www.plansponsordigital.com/plansponsor/october-november_2020
https://www.plansponsordigital.com/plansponsor/august-september_2020
https://www.plansponsordigital.com/plansponsor/june-july_2020
https://www.plansponsordigital.com/plansponsor/april-may_2020
https://www.plansponsordigital.com/plansponsor/february-march_2020
https://www.plansponsordigital.com/plansponsor/december-january_2020
https://www.plansponsordigital.com/plansponsor/october-november_2019
https://www.plansponsordigital.com/plansponsor/august-september_2019
https://www.plansponsordigital.com/plansponsor/june-july_2019
https://www.plansponsordigital.com/plansponsor/april-may_2019
https://www.plansponsordigital.com/plansponsor/february-march_2019
https://www.plansponsordigital.com/plansponsor/december_2018-january_2019
https://www.plansponsordigital.com/plansponsor/october-november_2018
https://www.plansponsordigital.com/plansponsor/august-september_2018
https://www.plansponsordigital.com/plansponsor/june-july_2018
https://www.plansponsordigital.com/plansponsor/april-may_2018
https://www.plansponsordigital.com/plansponsor/february-march_2018
https://www.plansponsordigital.com/plansponsor/december_2017-january_2018
https://www.plansponsordigital.com/plansponsor/november_december_2017
https://www.plansponsordigital.com/plansponsor/october_2017
https://www.plansponsordigital.com/plansponsor/september_2017
https://www.nxtbookmedia.com