Vesting Requirements

Q. I have an ERISA-exempt 403(b) with Transamerica. They are saying they want vesting for each participant's account and that this is required by the Pension Protection Act of 2006. Should the plan administrator tell them to vest everyone at 100%, or tell Transamerica that this does not apply?

A. Section 508 of the PPA did, in fact, amend the vesting requirements and say that statements to participants needed to include the vested percentage once per year (typically the last statement of the year). However, Section 508 amended ERISA, so that this is not a requirement for Non-ERISA plans even though most firms will provide the vested amounts.

I would tell them either: (1) the accounts are 100% vested; or (2) this provision does not apply to this plan.

If they are providing the statements, all they need to do is provide 100% vesting on the year-end statement.