Plan - Vesting tab
Use the fields on the Vesting tab screen to define the plan's provisions regarding vesting and normal and early retirement ages. TSM SmartClient, the Participant site, and the VRU allow Contribution Elections to be restricted to specific sources (as decided by a company) until a participant reaches a certain age (set up through TSM).
How to Access This Option
1. On the Setup menu, point to Plans, and then click Plan. The Plan window displays.
2. Click the Vesting tab.
The Plan – Vesting tab displays:
How to Complete the Vesting Parameters
1. Complete the following required fields:
· Select the Type. Your options are:
- By Hours (TSM SmartClient will calculate participant vesting based on the number of hours worked each year. You must enter the Hours Per Year.)
- By Elapsed Time (TSM SmartClient will calculate participant vesting based on a number of years counted by months. You must select Hire Date as the Vesting Cycle.)
· Select the Vesting Cycle from the list. (Choose Plan Year if vesting increments at plan year-end; Calendar Year if vesting increments every calendar year or Hire Date if vesting increments on hire date anniversary. Use Hire Date if you selected By Elapsed Time as the Type.)
2. If you have a non-qualified plan (QUALCA) whose vesting schedule vests 100% more than 5 years out, enter the maximum number of months in the Max Vesting Months field.
3. Enter the Hours Per Year employees must work to be credited with a year of service for vesting credit according to the plan document. Use this field if the vesting type is By Hours. This field cannot exceed 1,000 hours.
4. Select the Use Break in Service rules check box to apply break in service rules, if allowed by the plan. TSM SmartClient will track hire and termination dates in the Setup > Participants > Employment Dates option. The break in service rules should also be defined on the Setup > Plans > Break In Service Rules window. This is an optional field.
5. Enter the plan's definition of Normal Retirement Age and Early Retirement Age under the 100% Vesting Rules section. Plans generally accelerate a participant's vesting to 100% upon reaching normal and/or early retirement age. In addition to attaining a specific age, normal and early retirement may include completing a certain number of years of plan participation.
· Normal Retirement
Enter the Normal Retirement Age. Note: TSM SmartClient will 100% vest any active participant reaching this age. This is a required field.
Enter the Years of Participation the participant must be a plan participant to become 100% vested at retirement. TSM SmartClient uses the participant's 'Enrollment Date' found on the Setup > Participants > Participant screen to verify this. Note: If selected, the participant must also meet the specified retirement age.
· If applicable, enter the parameters for specifying Early Retirement:
Enter the Age to be used in combination with Years of Service to determine vesting. Once a participant reaches this age and has met the required years of service, he or she will be 100% vested for all contribution sequences marked 'Vesting Related.' See Also: Setup > Plans > Contribution Sequence.
Enter the Years of Service required to be considered a retired participant. This field is used in conjunction with the Age field for age and service vesting calculation.
Explanation of Fields
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Field Name |
Field Description |
Required / Optional |
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Vesting Type: Determines how the plan defines how a year of service is credited See Also: Setup > Participants > Payroll Detail, Setup > Plans > Vesting, Setup > Participants > Employment Dates |
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By Hours |
TSM SmartClient will calculate participant vesting based on the number of hours worked each year. |
Required if Elapsed Time is not selected |
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By Elapsed Time |
TSM SmartClient will calculate participant vesting based on the number of years worked counted by months. |
Required if By Hours is not selected |
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Consider all pay date hours for Determining Vest % |
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Optional if By Hours is selected |
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Vesting Cycle: Determines the Vesting Computation Period, as defined by the plan document, when Counting Hours Method is used |
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Plan Year |
Hours of Service completed during each plan year determines whether or not a year of service can be credited towards vesting. The number of years of service credited for a participant is then used to determine the vested percentage for the participant. |
Required if Hire Date is not selected |
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Calendar Year |
Vesting increments every calendar year. |
Required if Hire Date is not selected |
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Hire Date |
Hours of Service completed during each anniversary year determines whether or not a year of service can be credited towards vesting. The number of years of service credited for a participant is then used to determine the vested percentage for the participant. |
Required if By Elapsed Time is selected |
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Max Vesting Months |
Enter the number of months a participant must be in the plan to vest 100%. This option is used for non-qualified plans. |
Optional |
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Hours Per Year |
Enter the hours of service per year employees must work to be credited with a year of service for vesting purposes. Use this field if the vesting type is By Hours. Hours cannot exceed 1,000. |
Required if By Hours is selected |
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Use Break in Service rules |
Select this check box if the plan documentation allows for break in service rules to be applied. TSM SmartClient will track hire and termination dates on the Setup > Participants > Employment Dates window. The break in service rules should also be defined in the Setup > Plans > Break In Service Rules option. |
Optional |
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100% Vested Rules: Defines Normal Retirement Age, and Early Retirement Age, Death and Disability. Requirements (age and years of participation or service) met for both these ages will accelerate a participant's vested percentage to 100%. |
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Normal Retirement: Define parameters for Normal Retirement |
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Age |
Enter the normal retirement age. Note: TSM SmartClient will 100% vest any active participant reaching this age. This used in combination with participation to determine vesting. Once a participant reaches this age and has met the required years of participation, he will be 100% vested for all contribution sequences marked Vesting Related. See Also: Setup > Plans > Contribution Sequence |
Required |
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Years of Participation |
Optional |
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Early Retirement: Define parameters for Early Retirement |
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Age |
Enter the early retirement age. Note: TSM SmartClient will 100% vest any active participant reaching this age. This used in combination with service to determine vesting. Once a participant reaches this age and has met the required years of service, she will be 100% vested for all contribution sequences marked Vesting Related. |
Optional |
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Years of Service |
Enter the years of service required to be considered an early retired participant. This field is used in conjunction with the Age field for age and service vesting calculation. |
Optional |
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Death and Disability |
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Death |
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Optional |
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Disability |
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Optional |