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                                                          CYCLE A Submission Period – 02/01/2016 – 01/31/2017

Employee                                                  Explanation No. 2

Benefit                                                   Minimum 

                                                          Vesting Standards
Plans
                                                          Defined Contribution Plan

Note:                                                     The purpose of the Worksheet Number 2 (Form 5623) and 
                                                          this explanation is to identify major problems in the area of 
Plans submitted during the Cycle A submission period      plan vesting. However, there may be issues not mentioned in 
must satisfy the applicable changes in plan qualification the worksheet that could affect the plan’s qualification.
requirements listed in Section IV of Notice 2015-84, 
2014-52 I.R.B. 1 (the 2015 Cumulative List).              The worksheet applies only to plans to which Internal Rev-
                                                          enue Code section 411 applies, except plans mentioned in 
This publication contains copies of:                      section 411(e) (such as governmental plans) and plans that 
Form 5623, Worksheet 2                                    cover participants who are employed in maritime or seasonal 
Form 6041, Deficiency Checksheet 2                        industries.

These forms are included as examples only and should      Generally, a “Yes” answer to a question on the worksheet in-
not be completed and returned  to the Internal Revenue    dicates a favorable conclusion while a “No” answer signals 
Service.                                                  a  problem  concerning  plan  qualification.  This  rule  may  be 
                                                          altered by specific instructions for a given question. Please 
                                                          explain any “No” answer in the space provided on the work-
                                                          sheet.

                                                          The sections cited at the end of each paragraph of explana-
                                                          tion are to the Internal Revenue Code, the Income Tax Regu-
                                                          lations, and the Department of Labor (DOL) Regulations. Rev. 
                                                          Rul. means Revenue Ruling. A basic requirement to keep in 
                                                          mind for the vesting standards is that each participant’s vest-
                                                          ed interest must satisfy the statutory minimum at all times. A 
                                                          plan that generally provides faster vesting than the statutory
                                                          minimum will not fail to qualify merely because the plan does 
                                                          not adhere to the specific language found in the statute. For 
                                                          example, a plan that provides full and immediate vesting at 
                                                          age 21 would satisfy the statutory minimum vesting require-
                                                          ments even though language about a requirement for years of 
                                                          service is not found in the plan.

                                                          The technical principles in this publication may be changed 
                                                          by future regulations or guidelines.

Publication 6389 (Rev. 4-2016)  Catalog Number 48145A  Department of the Treasury  Internal Revenue Service  www.irs.gov

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Page 2                                                                   CYCLE A Submission Period – 02/01/2015 – 01/31/2017

I.  Years of Service And Breaks in Service

This section applies only to plans in which years of  service are a factor in determining a participant’s vested  interest. Therefore, DO NOT 
complete this section if the  plan provides full and immediate vesting for each  participant. Questions a. through f. and l. through p.  apply 
to plans that count hours of service. Questions g. through p. apply to plans that use the elapsed time method of counting service.
 
Line a. A vesting computation period is a 12-consecutivemonth  period used to determine whether an employee has completed a year of 
service for vesting purposes. Any plan must designate a vesting computation period, except a plan that uses an “elapsed time” method of 
counting service, or a plan in which years of service are not a factor in determining a participant’s vested interest. 
DOL Regs. 2530.200b-1(a)
DOL Regs. 2530.203-2

Line b. Depending on the definition of “hour of service”  and the method used to count these hours, a plan must  credit an employee 
with 1 year of service for vesting if the  employee completes at least 1000, 870, or 750 hours of  service in a vesting computation period.   

   (i) (H = 1000) A plan that counts all hours of service, or  that uses an equivalency based on a period of  employment (day, week, 
   semi-monthly payroll period,  month, or shift), cannot require the completion of more  than 1000 hours of service.  411(a)(5)(a)
   DOL Regs. 2530.200b-1(a)
   DOL Regs. 2530.200b-3(e)

   (ii) (H = 870) A plan that counts “hours worked,” or that  uses an equivalency based on earnings for an employee  who is compensated 
   on an hourly rate, cannot require  the completion of more than 870 hours of service.
   DOL Regs. 2530.200b-3(d)(1)
   DOL Regs. 2530.200b-3(f)(1)

   (iii) (H = 750) A plan that counts “regular time hours,”  or that uses an equivalency based on earnings for an  employee who is compen-
   sated on a basis other than an  hourly rate, cannot require the completion of more than  750 hours service.
   DOL Regs. 2530.200b-3(d)(2)
   DOL Regs. 2530.200b-3(f)(2)

Answer the following by using the applicable method of   counting hours (i, ii, or iii above).

Line c. If a plan counts all hours of service, credit each  hour for which (1) an employee is paid or entitled to  payment for the performance 
of duties, (2) an employee  is paid or entitled to payment because of a period of time  during which no duties are performed, and (3) back 
pay  is either awarded or agreed to by the employer. Note:  Item (2) may be limited to 501 hours for any single  occurrence. 
DOL Regs. 2530.200b-2(a)

If a plan credits hours of service by an equivalency based  on a period of service, and an employee is required to be  credited with at 
least 1 hour of service under the  paragraph above, then, depending on the basis used, the  plan must credit hours of service as follows:            

Basis of Equivalency            Number of Hours Credited

Day...........................................................at least 10
Week........................................................at least 45
Bi-weekly payroll period...........................at least 95
Month.......................................................at least 190

DOL Regs. 2530.200b-3(e)

If a plan counts “hours worked,” credit each hour for  which an employee is paid or entitled to payment for the  performance of duties; 
also credit hours for which back  pay is awarded, or agreed to, by the employer to the  extent that the back pay covers a period in which 
the  employee would have been employed in the performance  of duties for the employer. 
DOL Regs. 2530. 200b-3(d)(3)(i)
   
If a plan counts “regular time hours,” credit each hour  for which an employee is paid or entitled to payment for  the performance of duties 
(except hours for which a  premium rate is paid). 
DOL Regs. 2530.200b-3(d)(3)(ii)

If a plan credits hours of service by an equivalency  based on earnings for an employee who is compensated  on an hourly rate, an 
employee must be credited during a  computation period with at least the number of hours  equal to either the employee’s total earnings--
 
   (1) from time to time during the computation period, divided by the hourly rate of those times; or
      
   (2) for performance of duties during the computation  period divided either by the employee’s lowest hourly rate  during that time, or by

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Page 3 CYCLE A Submission Period – 02/01/2015 – 01/31/2017
the lowest hourly rate payable to an employee in the same, or a similar, job classification.
DOL Regs. 2530.200b-3(f)(1)(i)

If a plan credits hours of service by an equivalency based on earnings, and determines compensation other than on an hourly rate,
the employee must be credited during a computation period with at least the number of hours equal to his or her total earnings for du-
ties performed during that period, divided by the employee’s lowest hourly rate of compensation during the same period. (See the DOL
Regulations.) Note: If the same hourly rate of compensation is used for all employees, this method may result in discrimination in favor
of highly compensated employees.
DOL Regs. 2530.200b-3(f)(2)

Line d. If H = 1000 in b., above, answer this question; otherwise check N/A. If a plan credits hours of service for periods during which no
duties are performed, the plan must designate the method of determining the number of hours to be credited and the method of crediting
the hours to the computation periods. The plan must conform to the requirements of DOL Regulations sections 2530.200b-2(b) and
(c). Section 2530.200b-2(f) of the DOL Regulations, however, also indicates that a plan is not required to state these rules if they are
incorporated by reference.
DOL Regs. 2530-200b-2(b), (c) & (f)

Line e. The break in service rules allow a plan to disregard certain service before the employee has a break. If all of an employee’s
service with an employer is counted for vesting, the plan need not provide these rules. In this case check N/A.

Depending on the definition of “hour of service” and the method used to count these hours, a plan may charge an employee with a break
in service for any vesting computation period in which the employee fails to complete more than B hours of service. The number re-
quired for B, if a certain method of counting hours is used, equals half of the hours used in question b. of this section of the worksheet.
Therefore, a plan may provide that an employee be charged with a break in service if in a computation period the employee fails to
complete: more than 500 hours of service in a plan that counts all hours of service; or, more than 435 hours if the basis used is “hours
worked”; or, more than 375 hours if the basis is “regular time hours.”
DOL Regs. 2530.200b-3 & 4
DOL Regs. 2530.203-2(d)

Line f. An individual shall be credited with certain hours of service if such individual is absent from work for any period by reason of 1)
pregnancy of the individual, 2) birth of a child of the individual, 3) placement of a child with the individual in connection with an adop-
tion or 4) caring for a child described in (2) or (3) immediately following such birth or placement. This credit is credit for maternity or
paternity leave. Credit for maternity or paternity leave is only made to avoid a break in service and not to obtain a year of service. The
absence does not have to be approved leave.

Credit for maternity or paternity leave is required only if such leave is on account of the reasons described above. Thus if an individual
quits employment with employer A and two years later adopts a child, no credit under this provision would be given if the individual even-
tually returns to work for employer A because said individual’s absence from employer A’s workplace is on account of quitting and not on
account of the adoption of or the caring for the child immediately following the adoption.

Hours of service must be credited to the computation period in which the first hour of maternity or paternity leave occurs, if such individ-
ual would experience a break in service with respect to such computation period if such maternity or paternity leave is not credited and
such individual will not experience a break in service if such maternity or paternity leave is credited. If such maternity or paternity leave
is not credited to the first computation period, it is credited to the second computation period whether or not it is needed to preclude a
break in service.

The rules may be illustrated with the following example: Individual A separates from service on March 1, 2006, of a calendar year com-
putation period after earning 300 hours of service. The plan defines a year of service as a computation period in which the employee
earns 1000 hours. The employer provides for paid maternity leave for a period not to exceed 300 hours.

Under the normal rules of crediting service paid maternity leave must be credited for service. Therefore, individual A in 2006 would not
experience a break in service even if the hours required to be credited are not so credited. Accordingly, no hours of service would be
credited to the first computation period in 2006. Therefore, all such hours of service are credited in the second computation period of
2007.

The number of hours credited with respect to a computation period is the number of hours such individual would normally have worked
in the computation period if such individual were not on maternity or paternity leave. If the number is not ascertainable, the plan may
credit 8 hours with respect to any day said individual is absent on maternity or paternity leave. The plan may limit the number of hours
credited to any computation period to the number of hours needed to avoid a break in service, i.e., 501 hours, 436 hours, or 376 hours
depending on how hours are counted. The plan may provide that the participant has the burden of proving that the absence was by
reason of one of the covered causes.

The plan can use a simplified method for complying with the requirements relating to maternity and paternity absences. If the plan’s
break in service rules require a minimum of six consecutive one year breaks in service for service to be disregarded (versus the statutory
minimum of five), then the plan will not have to include any special rules relating to maternity and paternity absence. This simplified
method is available only if the plan computes years of service on the basis of hours of service or permitted equivalencies. It does not

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apply to elapsed time  plans. 
411(a)(6)(E)1.410(a)-9

Line g. The employment commencement date must be  no later than the date on which the employee first  performs an hour of service 
for the employer. The  severance from service date is the earlier of the date an  employee quits, retires, is discharged, or dies, or the 
first  anniversary of the first day of a period of absence from  service for any reasons other than quitting, retiring,  discharge, or death.     

The employee must be credited with service equal to at  least the time between the employment commencement  date and the severance 
from service date.
1.410(a)-7(b) & 411(a)(5)(B)

Line h. Generally a plan must aggregate all separate  periods of service, except for any that may be  disregarded due to the rule of parity. 
Alternatively,  instead of keeping separate periods of service, the plan  may aggregate by adjusting the employment  commencement 
date. If the plan uses this alternative to  credit the aggregate period of service, check “Yes” for  question h.
1.410(a)-7(b)(6)(ii) & 411(a)(5)(B)

Line i. A period of severance is the period of time  between the employee’s severance from service date  and the date the employee again 
performs an hour of service for the employer.     

If an employee severs from service by quitting, being  discharged or retiring, and then performs an hour of  service within 12 months of 
the severance from service  date, the plan must consider the period of severance as a  period of service.     

Also, if an employee severs from service for any reason  other than quitting, being discharged, or retires and then  performs an hour of 
service within 12 months of the date  on which he or she was first absent from the service, the  plan must consider that period of sever-
ance as a period of  service. 
1.410(a)-7(d)(1)(iii) & 411(a)(5)(B)

Line j. The break in service rules allow a plan to disregard  certain service before the employee has 5 consecutive  1-year breaks. If all of 
an employee’s service with an  employer is counted for vesting, the plan need not provide  these rules. In this case, check N/A.     

If a plan uses elapsed time, substitute “1-year period of  severance” for “1-year break in service.” A 1-year period  of severance is a 
12-consecutive month period beginning  on the severance from service date and ending on the first  anniversary of that date provided that 
within this period  the employee does not perform an hour of service for the  employer maintaining the plan. 
1.410(a)-7(d)(4) & 411(a)(5)(B)

Line k. An individual shall not incur the first 12- month  period of severance that would otherwise be counted if  severance is due to mater-
nity or paternity leave. Such  12-month period is neither counted as a year of service  nor as a period of severance. Maternity or paternity 
leave  is a period an individual is absent from work by reason of  1) pregnancy of the individual, 2) birth of the child of the  individual, 3) 
placement of a child with the individual in  connection with an adoption or 4) caring for a child  described in (2) or (3).     

Credit for maternity or paternity leave is required only if  such leave is on account of the reasons described  above. Thus, if an individual 
quits employment with  employer A and two years later adopts a child, no credit  under this provision could be given if the individual  even-
tually returns to work for employer A because such  individual’s absence from employer A’s workplace is on  account of quitting and not 
on account of the adoption of  or the caring for the child immediately following the   adoption.     

If an individual works until July 1, 2006, is first absent  from employment on July 1, 2006 on account of maternity  or paternity leave, and 
on July 1,2009 performs an hour  of service, the period of service must include the period  from the employment commencement date un-
til   June 30 , 2007 (one year after the date of separation for   a reason other than the employee quitting, retirement,  discharge or death). 
The period from July 1,2007 to   June 30, 2008 is neither a period of service nor a period of severance.  The period of severance would 
be from July 1,2008 to June 30, 2009.
411(a)(6)(E)(iii)
1.410(a)-9

Line l. In general, for vesting purposes, count all years of  service with the employer who maintains the plan.  However, there are several 
exceptions to this rule. Years  of service before an employee reaches age 18 may be  excluded. If a plan uses a vesting computation 
period,  count the vesting computation period in which an  employee becomes 18 as a year of service. If a plan uses  elapsed time, count 
the period after the employee  became 18 when figuring the employee’s period of service.

Except for top-heavy years, a contributory plan that  uses a vesting computation period may exclude a year of  service in which an 
employee made no mandatory  contributions, if the absence of the contribution was the  only reason the employee was ineligible to 
participate in  the plan. A year of service in which a partial mandatory  contribution was made may not be excluded, regardless  of the 
effect on participation. If a plan uses elapsed time  you may exclude only the period in which the mandatory  contribution was not made. 
You may also disregard years  of service before the employer maintained the plan or a  predecessor plan as well as years of service 
not required  to be taken into account because of a break in service.  (For a definition of a predecessor plan, see 1.411  (a)-5(b)(3)(v)(B) 
of the Income Tax Regulations.) You  may also disregard the years of service completed before  January 1, 1971, unless the employee 
completed 3 years  of service (whether or not consecutive) any time after  December 31, 1970. (In determining whether an  employee

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completed 3 years of service under this rule, do  not apply the other exceptions described in this  paragraph.) Finally, you may disregard 
plan years  completed before section 411 applied to the plan, if the  service would have been disregarded under any terms of  the plan 
which at that time served as break-in-service  rules. 
411(a)(4)
1.411(a)-5(a) & (b)

Line m. For vesting purposes, count all years of service  with the employer, including the years spent as a  nonparticipant and those 
when the employee was in a  category of employees excluded from the plan, unless  one of the exceptions noted in section 411(a)(4) 
applies  (see I. above). Years of service excluded for years prior  to age 22 under the law before the Retirement Equity Act  may not, 
subsequent to the effective date of REA, be  excluded unless 1) such service is for years prior to age  18, or 2) such service would be 
excluded under the Rule  of Parity prior to REA. This change only applies to those  with an hour of service after REA’s enactment. 
 
Line n. For vesting purposes, years of service with an  employer must include credit for service with other  related employers (while 
related) that are members of a  controlled group of corporations, (see section 1563(a)  without regard to subsection (a)(4) and (e)(3)(C)) 
and  trades and businesses under common control and  affiliated service groups (see sections 414(b), (c) and  (m)). 
1.411(a)-5(b)(3)(iv)(B)
414(b), (c) & (m)

Line o. If the employer maintains the plan of a  predecessor employer, service with the predecessor is  counted as service with the em-
ployer. If the employer is  not maintaining the plan of a predecessor employer, check N/A. 
414(a)(1)

Line p. Services of any employee who is a leased  employee to any employer aggregated under section  414(b),(c), or (m) must be 
credited for vesting purposes  whether or not such individual is eligible to participate in  the plan. Thus, for example, if an individual was 
an  employee of X, participates in plan Y and separates with  X subsequent to acquiring a benefit in plan Y but prior to  obtaining vesting 
in plan Y, begins working immediately  with leasing company Z and through company Z is  leased back to X, and is now excluded from 
plan Y, such  service as a leased employee to X must be counted in  plan Y for purposes of determining vesting, breaks in  service, etc., 
of such individual’s prior accrued benefit. 
414(n)(4)
Q&A 12 Notice 84-11

II. Vesting on Separation From Service - Return to Service Without a Break in Service

A distinction should be made between a separation from  service and a break in service. A participant may  separate from service without 
affecting his or her position  on the vesting schedule, if the participant returns to  service with the employer before having 5 consecutive 
1  year breaks in service.     

For example: A plan has a vesting computation period  that coincides with the calendar year. An employee  separates from service 
after January 1, after completing  300 hours of service. The employee later returns to  covered employment and completes more than 
200  hours of service before December 31 of the same year. 

Of course, an employee would have a break in service  without a separation from service in any vesting  computation period in which the 
employee completes  500 or less hours of service while remaining employed  with the employer. 

Line a. In a given vesting computation period, it is  possible that a participant will avoid a break in service  but will not complete sufficient 
hours of service to be  credited with a year of service. In this case the participant  will remain in the same position on the vesting schedule 
(without advancement). 
1.411(a)-6

Line b. The plan may provide for forfeiture of nonvested  amounts prior to a participant incurring 5 consecutive  1-year breaks in service 
only as the result of distribution  on termination with opportunity for restoration upon  resumption of covered employment (cash-out/buy-
back). See V., below regarding rules relating to cash-out distributions. If  the participant incurs 5 consecutive 1-year breaks in service, the 
plan may be able to forfeit nonvested amounts even though there has not been a cash-out distribution. See III., below. 
411(a)(7)(B) & (C)
1.411(a)-7(d)(4)

III. Vesting on Return to Service After a Break in Service

A plan may provide that a participant who separates from service and has a one year break in service will not  receive the credits de-
scribed below immediately. The plan cannot, however, require the participant to complete  more than one year of service upon the partic-
ipant’s  return before the credits described below are provided  the participant. Service is figured from the date of return to employment. 
After the waiting period is satisfied, the  waiting period is counted as part of the postbreak  service.     

In the case of a participant, whether or not vested upon  separation, all service must be counted if the participant  returns prior to having 
5 consecutive breaks in service. In  such instances, pre-break service will count in  determining vesting in both pre-break and post-
break  account balances and post-break service will count in  determining vesting in both pre-break and post-break  account balances.

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If the participant has 5 or more consecutive breaks in service, all service (both pre-break and post-break) must be counted in determin-
ing the vesting percentage in the post-break account balances in two circumstances. First, when a participant has any nonforfeitable
interest in the accrued benefit attributable to employer contributions at the time of separation from service. Second, when the number
of years of service before the break exceed the number of consecutive break in service years.

Thus, in the case of a participant with a nonforfeitable interest at the time of separation, the length of the break in service is irrelevant
with respect to counting pre-break service for the percent of vesting in post-break account balances upon reemployment. The length of
the break is relevant with respect to counting post-break service for percent of vesting in pre-break accrued benefits (obviously, only
where the participant was not 100% vested upon the break) if the break in service is at least 5 consecutive years.

For a nonvested participant, under the rule of parity, pre-break service must be counted in determining percent vesting in post-break
account balances unless the number of consecutive break in service years equals or exceeds the greater of the number of years of ser-
vice before the break or 5. For the nonvested participant (just as for a vested participant) post-break service is counted for the percent
vesting in pre-break account balances only where the number of consecutive break in service years is less than 5.

In all cases, post-break service must apply to post-break account balances.

For a plan that uses elapsed time, if the participant has one year of severance, the plan is required to consider prior periods of service
in determining the participant’s interest in severance is less than five years.

If the participant has at least a 5 year period of severance, the plan is required to consider a prebreak period of service in determining
the vesting portion of post severance contributions if the period of severance is less than the period of service.
411(a)(6)(B), (C) & (D)
1.411(a)-(6)(c)(1)
1.410(a)-7(d)(7)

IV. Contributory Plans

Line a. The plan must provide a method to identify and distinguish that part of any account balance that resulted from employee con-
tributions from that part that resulted from employer contributions. A plan that provides for separate accounts for employer and employ-
ee contributions satisfies this requirement. When separate accounts are not maintained, the account balance of employee contributions
can be determined by multiplying the total account balance by a fraction:

(1) The numerator is the total amount of the employee’s contributions under the plan less withdrawals, and

(2) The denominator is the total amount described in (1) above, and the employer’s total contributions under the plan on behalf of the
employee, less withdrawals. Employee contributions include all amounts that are contributed to the plan, even if the amounts are used
to provide ancillary benefits such as death, incidental life, or health insurance.

Employee withdrawals include only amounts distributed to the employee. They do not reflect the cost of any death benefit under the plan
(cost of pure life insurance protection is not considered paid for by employee contributions).
411(c)(2)
1.411(c)-(1)

Line b. An employee’s account balance that resulted from the employee’s own contributions must be nonforfeitable.
411(a)(1)

Line c. The plan must provide that vesting in employer contributions conforms to statutory required minimums and may not be offset by
nonforfeitable rights to account balances that resulted from employee contributions (which are always fully vested).
TIR 1334(V-1)

Line d. A plan cannot provide that an employee may forfeit any part of the account balance that resulted from employer contributions
because of the withdrawal of the employee’s own contributions after the employee is vested in 50 percent of the account balance that is
the result of employer contributions. For contributions made before September 2, 1974, see Line e.
401(a)(19) & 411(a)(3)(D)
1.401(a)-19

Line e. If forfeitures cannot occur because of a withdrawal of mandatory employee contributions, check N/A.

Except where top-heavy rules are applicable, a plan may require a participant to forfeit all or part of the participant’s account balance
that resulted from employer contributions because of withdrawal of any mandatory employee contributions if the participant is less than
50 percent vested in the account balance. However, if the forfeiture is permitted, the forfeited amounts must be restored when the par-
ticipant repays the amount of mandatory employee contributions withdrawn.

When a participant has a right to part of the employer-derived benefit from contributions made before September 2, 1974, the right is

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not treated as forfeitable even though all or part of the benefit may be forfeited by the participant’s withdrawal of an amount that resulted 
from the benefit. However, the benefit must have been the result of mandatory contributions by the participant before September 2, 1974, 
and the amount that can be forfeited must not be more than the proportionate amount  withdrawn. This rule does not apply to a plan with 
mandatory contributions made after September 2, 1974.    

The amount required to be restored must not be less than the amount forfeited. Forfeited amounts may be restored from income or gain 
to the plan, forfeitures, or employer contributions. If assets for the restored benefit are provided in the plan year following the plan year in 
which the repayment occurs, an account balance will not be considered as unfunded. The plan may require that restoration of employer 
contributions be contingent on repayment of withdrawn mandatory employee contributions. The plan may require repayment no earli-
er  than (i) in the case of a withdrawal on account of separation from service, before the earlier of 5 years after  the first date on which the 
participant is subsequently  reemployed, or the close of the first period of 5  consecutive 1-year breaks in service commencing after  the 
withdrawal; or (ii) in the case of any other withdrawal, 5 years after the date of the withdrawal.     

Also, the plan could delay the forfeiture until the  expiration of the time for repayment. Then, because no restoration would be required, 
a “No” answer is  acceptable. 
1.411(a)-7(d)(2) & (3)

V. Cash-Outs and Other Distributions of Benefits That Result From Employer Contributions 

A cash-out is a distribution of all or some portion of the  participant’s nonforfeitable accrued benefit under the  plan, accompanied by a 
forfeiture of the nonvested  benefit and a disregard to service to which the  distribution is attributable for the purpose of computing  the 
employee’s accrued benefit. If the plan has no  cash-out provision, this line is N/A and only lines b. and  c. need be completed. Cash-out 
rules may not be applied  to accounts from which mandatory contributions have  been withdrawn. The forfeitable account balance attribut-
able to a cash-out distribution must be forfeited no later than the end of the plan year in which the participant incurs 5 consecutive 1-year 
breaks in service. Also, answer line c. for all distributions, not just cash-outs.
1.411(a)-7(d)(1)
411(a)(11)

Line a. Distributions which cash-out an accrued benefit

(i) Any involuntary cash-out distribution must be an amount not less than the participant’s entire nonforfeitable account balance. An 
involuntary cash-out is one which does not require consent. An involuntary cash-out may not be made if the participant’s nonforfeitable 
account balance, including employee derived amounts, is in excess of $5,000  and the benefit is immediately distributable.
411(a)(7)(B)(i)
1.411(a)-7(d)(4)(i)

(ii) A cash-out distribution may only be made on an  employee’s termination of participation in the plan. Unless  the participant receives 
a cash-out distribution on  termination, the plan must delay forfeiture until the plan  year in which the participant incurs 5 consecutive 
1-year  breaks in service. A distribution made not later than the  close of the second plan year following the year in which  a participant 
terminates participation in the plan is  deemed to be made on termination. Distributions after the  second plan year and prior to the 5th 
consecutive break  may be made on account of termination of participation if  the facts and circumstances so demonstrate. If the  par-
ticipant has received a cash-out distribution, the plan  may forfeit benefits at any time until, but no later than, the  end of the plan year 
in which the participant incurs 5  consecutive breaks in service. Pursuant to final regulations under section 1.411(a)-7(d)(4)(i) and (vi), 
an involuntary distribution of an employee’s vested account balance of $5,000 or less can be treated as made due to termination of 
the employee’s participation if the distribution could have been made at the termination of participation but for the fact that the account 
balance was then valued at more than the cash-out limit previously in effect under section 411(a)(11). This provision applies to distribu-
tions made on or after March 22, 1999. However, an employer is permitted to apply this rule to plan years beginning on or after August 
6, 1997.
411(a)(7)(B)
1.411(a)-(d)(4)(i) & (iii)
   
(iii) A plan that provides for cash-out distributions must  contain a repayment provision in the event the participant  resumes employ-
ment covered by the plan. The plan may  provide that repayment must be made (i) in the case of a  withdrawal on account of separation 
from service, before  the earlier of 5 years after the first date on which the  participant is subsequently reemployed, or the close of  the 
first period of 5 consecutive 1-year breaks in service  commencing after the withdrawal; or (ii) in the case of  any other withdrawal, 5 
years after the withdrawal. A  participant who is cashed-out and who, upon subsequent  reemployment, repays the full amount must be 
reinstated  in the full array of section 411(d)(6) protected benefits  that existed with respect to his or her benefit prior to the  cash-out. 
(See VII.c., below.) Upon repayment, the  employer-derived benefit required to be restored by the  employer must not be less than the 
amount of the  account balance of the employee, both the amount  distributed and the amount forfeited, unadjusted by any  later gains 
or losses.
1.411(a)-7(d)(4)(iv) & (V)
1.411(d)-4 Q&A 2(a)(2)(iii)

(iv) When a cash-out distribution has been made, the  service attributable to the amount distributed may be  disregarded for the pur-
poses of computing the balance to  remain in an employee’s account. In the case of a  cash-out distribution where the nonforfeitable 
account  balance is not in excess of $5,000, the entire remaining  account balance will be forfeited.

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For a voluntary cash-out, an employee may receive  less than the total nonforfeitable account balance in a  plan that provides for a par-
tial cashout. Then, to get the  account balance not required to be taken into account at  any time, multiply the employee’s total account 
balance  at that time (figured as though there was no prior  distribution) by a fraction. The numerator is the amount of  the distribution, 
and the denominator is the present value  of the total nonforfeitable benefit immediately before the  distribution. Service disregarded 
under this section may  not be disregarded when determining employees’  eligibility to participate or their position on the plan’s  vesting 
schedule.
411(a)(7)(B)
1.411(a)-7(d)(4)(iii)

Line b. Distributions which do not cash-out an accrued benefit.

(i) and (ii) It may be possible under some plans for a  participant who separates from service with less than a  100 percent vested interest 
in the account balance to  receive a distribution of the vested interest before having  5 consecutive breaks in service. In this event, and 
in  plans in which an employee can increase his or her  percentage of vesting after a distribution, figure account  balances in a manner 
which satisfies one of the methods  outlined below.     

A separate account may be established or an account  balance must be maintained for the employee’s interest in  the plan as of the time 
of the distribution and at any  relevant time in the future. A participant’s vested interest  in a separate account cannot be less than the 
amount  determined by the first of the following formulas:     

(1) X = P (AB + [R x D]) - (R X D)
X is vested interest at relevant time.
P is vested percentage at relevant time.
AB is account balance at relevant time.
D is amount of the distribution.
R is the ratio of the account balance at the relevant time over the account balance after distribution. The relevant time is the time at 
which the vested percentage in the account cannot increase.

(2) x = P(AB + D) - D may be used instead of the above formula. A separate account is not needed with this formula.

Line c. The plan cannot immediately distribute any  benefits where the vested account balance (taking into  account employer and em-
ployee contributions) exceeds  $5,000 without the consent of the participant (see below  for transition rules). A benefit is immediately 
distributable  if any part of the benefit (account balance) may be  distributed before the later of NRA or age 62. If a participant has attained 
NRA, but has not yet  attained age 62 (or vice versa), the participant’s failure to  consent to a distribution is deemed to be an election 
to  defer commencement of payment sufficient to satisfy  section 401(a)(14). For plans subject to section 417,  spousal consent is also 
required unless the nonforfeitable  account balance does not exceed $5,000 (without taking into account amounts which were rolled over 
by the participant into the employer’s plan), or the distribution is in the form of a qualified joint and survivor annuity. Also, in a plan subject 
to section 417, participant and spousal consent to an immediate distribution will be required where such distribution is after the “annuity 
starting date” (defined in section 417(f)(2)), even if the nonforfeitable account balance does not exceed $5,000.  See Worksheet 3 con-
cerning Joint and Survivor requirements.

The cash-out limit under section 411(a)(11) was raised  to $5,000 from $3,500 for distributions after August 5,1997.  Regulations were 
issued implementing this increase and  other changes to the cash-out rules. One of these changes  was to the lookback rule, which 
provided that the present  value of a vested account balance was deemed to exceed  the cash-out limit if it had exceeded the cash-out 
limit at  the time of any previous distribution. Temporary regulations  under section 1.411(a)-11(c)(3), effective for distributions  on or af-
ter March 22, 1999, eliminated the lookback rule for  distributions other than those made pursuant to an optional  form of benefit under 
which at least one scheduled periodic  distribution remained payable. The final regulations,  effective October 17, 2000, also eliminated 
the parallel  lookback rule under section 1.417(e)-(1)(b)(2)(1). Thus the  lookback rule was eliminated both for plans subject to the  spou-
sal-consent rules of section 417 and for plans not  subject to those rules. Under this removal of the lookback  rule, a participant’s vested 
account balance of $5,000 or  less may be distributed without consent even if the account  balance had been valued at more than $5,000 
at the time  of a previous distribution.   

However, in accordance with  section 417(e)(1), if a plan is subject to the spousal  consent rules consent would be required after the 
annuity  starting date for the immediate distribution of the account  balance being distributed in any form, including a qualified  joint and 
survivor annuity or qualified preretirement survivor  annuity, regardless of the amount of the account balance. 

For distributions made on or after March 28, 2005, mandatory distributions of more than $1,000 from a qualified plan must be paid in a 
direct rollover to an IRA if the distribute does not make an affirmative election to have the amount paid in a direct rollover to an eligible 
retirement plan or to receive the distribution directly.  Spousal consent is required for such a distribution only if the plan is subject to the 
joint and survivor annuity and preretirement survivor annuity requirements and the present value of the distributee’s non-forfeitable benefit 
under the plan exceeds $5,000.
411(a)(11),
401(a)(31)(B)
417(e)
1.411(a)-7(d)(5)

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Page 9                                                                                     CYCLE A Submission Period – 02/01/2015 – 01/31/2017
1.411(a)(11)-1
Notices 2005-5 & 2005-95

Line d. Section 411(a)(8) provides that the term “normal retirement age” means the earlier of (A) the time a plan participant attains normal 
retirement age under the plan or (B) the later of age 65 or the fifth anniversary of the time a plan participant commenced participation 
in the plan. A plan’s normal retirement age is relevant for a number of purposes, including determining the date at which a participant is 
eligible to receive his or her normal retirement benefit and calculating the amount of the benefit received.
 
Pursuant to ITR § 1.401(a)-1(b)(2), which was finalized on May 22, 2007, pension plans may permit in-service distributions upon attain-
ment of normal retirement age.  Under the regulation, a pension plan (including a defined contribution money purchase pension plan) 
cannot have a normal retirement age that is less than an age reasonably representative of the typical retirement age for the industry in 
which the covered workforce is employed.  A normal retirement age of 62 or greater is deemed reasonable; below age 62, the sponsor 
must demonstrate the normal retirement age is reasonable (substitute “age 50” for “age 62” in the case of a plan where substantially 
all of the participants are qualified public safety employees (within the meaning of § 72(t)(10)(B)).  If the plan’s normal retirement age is 
at or above age 55, the IRS will give deference to a good faith determination made by the employer (or, in the case of a multiemployer 
plan, made by the trustees) that the normal retirement age is reasonable under the industry standard described above assuming that 
the determination is reasonable under the facts and circumstances.  If the plan’s normal retirement age is below age 55, it is presumed 
to be earlier than the earliest age that is reasonable under the industry standard described above unless the Commissioner determines 
otherwise under the facts and circumstances.
  
Notice 2007-69, 2007-2 .B. 468, provided that, until the first plan year beginning after June 30, 2008, plans that, immediately prior to May 
22 2007, had normal retirement ages that were below age 62 (but would not permit any participant hired at age 18 or older to attain NRA 
before age 40) would not be disqualified, provided the plan sponsor adopts a good faith interim amendment to comply with the regulation 
or reasonably and in good faith determines that no such amendment is necessary.  (This relief is not applicable to plans that are not 
required to be amended to raise the plan’s normal retirement age effective before the first day of the first plan year beginning on or after 
July 1, 2008 – that is, governmental plans and some collectively bargained plans). 

Notice 2007-69 also provided that if a plan’s normal retirement age, as in effect under the plan immediately prior to May 22, 2007, was 
below age 55 (but would not permit any participant hired at age 18 or older to attain NRA before age 40), the plan sponsor’s good faith 
determination of the typical retirement age for the industry will be given deference until the date the Service rules on the plan’s NRA, 
provided the sponsor’s determination was reasonable under the facts and circumstances and the sponsor requests a private letter ruling 
on the plan’s NRA by June 30, 2008.  If, during the ruling process, it is determined that the plan’s NRA does not reasonably represent 
the typical retirement age for the industry, the plan’s NRA will be required to be raised only prospectively from the date of issuance of the 
private letter ruling.  If the plan sponsor chooses not to request a private letter ruling, the plan will still be eligible for the relief described in 
the preceding paragraph, assuming the plan’s NRA, as in effect under the plan on May 22, 2007, would not permit any participant hired 
at age 18 or older to attain NRA before age 40.

Accordingly, for determination letter applications filed in Cycle C,  a plan sponsor was not required to demonstrate the reasonableness 
of the plan’s definition of normal retirement age unless the pension plan was not eligible for the relief under Notice 2007-69or the relief 
for the plan ended before December 31, 2008.  Notice 2008-108, 2008-2 C.B. 1275, provides, however, that the final regulations will be 
taken into account in the Service’s review of plan submitted for determination letters filed in Cycle D since the relief provided under relief 
in Notice 2007-69 is temporary. 

Plan amendments that are adopted to raise the plan’s normal retirement age in compliance with §1.401(a)-1(b)(2) above are interim 
amendments under Rev. Proc. 2007-44, 2007-2 C.B. 54.  Accordingly, the remedial amendment period with respect to § 1.401(a)-1(b)
(2) and (3) is extended to the end of a plan’s applicable 5-year or 6-year remedial amendment cycle (described in section 6.01 of Rev. 
Proc. 2007-44) that includes the date on which the remedial amendment period would otherwise end, if, by that date, the plan sponsor 
either adopts a good faith interim amendment to comply with § 1.401(a)-1(b)(2) and (3) or reasonably and in good faith determines that 
no amendment is required.  Such an amendment is excepted from the anti-cutback rules of § 411(d)(6) to the extent that it eliminates a 
participant’s right to an in-service distribution at the earlier age.  In order to comply with § 411(a) and § 411(d)(6), however, a plan sub-
ject to § 411 for which the normal retirement age has been raised to comply with the new regulations must ensure that a participant who 
became or would have become eligible for payment of benefits at the normal retirement age under the prior plan terms, and who has 
severed from employment with the employer or employers maintaining the plan, continues to be eligible for payment at the same age and 
in at least the same amount as under the prior plan terms with respect to benefits accrued prior to the applicable amendment date (within 
the meaning of § 1.411(d)-3(g)(4)).

The NRA regulations were originally effective for governmental plans for plan years beginning on or after January 1, 2009, but in Notice 
2009-86 the Service and Treasury announced their intention to amend the NRA regulations to change the effective date for governmental 
plans to plan years beginning on or after January 1, 2013.  Notice 2009-86 also provides that governmental plan sponsors may rely on 
the notice with respect to this extension until the NRA regulations are amended.
411(a)(8)
411(d)(6)
1.401(a)-1(b)(2)
1.411(d)-4, Q&A-12
Notice 2007-69, 2007-2C.B. 468.

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Page 10 CYCLE A Submission Period – 02/01/2015 – 01/31/2017

Line e. A plan may permit “in-service” distributions to a participant who has attained age 62 and has not separated from employment at
the time of the distribution, in accordance with section 401(a)(36)
401(a)(36)

VI. VESTING SCHEDULE

The plan’s vesting schedule identifies the factor to be used when determining how much of the employer’s contributions to the account
an employee is entitled to at any time.

Lines a. and b. In general, a plan must provide vesting at a rate at least equal to one of the vesting schedules described in section
411(a)(2). For contributions made for plan years beginning before January 1, 2007, and subject to the special rule for matching contribu-
tions, section 411(a)(2) is satisfied if an employee is 100% vested in the employer-derived accrued benefit after no more than 5 years of
service (“5-year cliff” vesting) or if an employee is 20% vested after 3 years of service and an additional 20% for each subsequent year
of service with 100% vesting after 7 years of service (“3 to 7 year graded” vesting). Effective for plan years beginning after December
31, 2001, a defined contribution plan satisfies the minimum vesting requirements with regard to employer matching contributions if it
has a “3-year cliff” or a ”2 to 6 year graded” vesting schedule. For contributions made for plan years beginning after December 31, 2006,
all employer contributions are subject to a “3-year cliff” or a “2 to 6 year graded” vesting schedule.

(For years beginning before the applicable effective date in the Small Business Job Protection Act of 1996, a multiemployer plan could
provide for 10-year cliff vesting for employees covered under a multiemployer collective bargaining agreement. A multiemployer plan
may not retain 10-year cliff vesting with respect to participants who have more than one hour of service under the plan in a plan year
beginning on or after the applicable effective date, but must satisfy one of the vesting schedules in section 411(a)(2)(A) and (B). The
applicable effective date is the earlier of January 1, 1999, or the later of January 1, 1997, or the date on which the last of the collective
bargaining agreements pursuant to which the plan is maintained terminates.) A plan’s vesting schedule cannot merely satisfy the require-
ments of any one of the applicable permissible vesting schedules in section 411(a)(2) in a given year without satisfying the requirements
of that particular vesting schedule for all years. For example, a plan other than a multiemployer plan that provides no vesting for the first
four years of service and then provides 60 percent vesting after 5 years of service with an additional 20 percent for each subsequent
year to provide 100 percent vesting after 7 years of service would not satisfy the requirement. This schedule would satisfy a compos-
ite of the requirements of either “5-year” or “3-7 year” vesting for all years but would not meet the requirements of either one of these
schedules for all years.

A plan may no longer be required to adopt a “4-40” vesting schedule. Furthermore, a plan may not continue to use the “4-40” vesting
schedule because it does not provide vesting at a rate at least equal to one of the vesting schedules described in section 411(a)(2).

A plan may satisfy one of the minimum vesting schedules for one group of employees and another schedule for another group of employ-
ees provided the groups are not structured to avoid the minimum vesting requirements.
1.411(a)-3(a)(2), Rev. Proc. 89-29

Line c. A new vesting schedule substituted by a plan amendment must satisfy one particular vesting schedule of the schedules listed
in section 411(a)(2)(A) or (B) for each year of service, but this does not have to be the same schedule as the plan satisfied before the
amendment. Therefore, a plan that provides for 100 percent vesting only after 3 years of service may be amended to “2 to 6 year” vest-
ing provided the requirements of section 411(a)(10) are met.
1.411(a)-3(a)(3)

VII. Amendments Affecting Accrued Benefits And Vesting

This section applies to plan amendments that affect, either directly or indirectly, the accrued benefit or the vesting schedule under the
plan. Code sections 411(a)(10) and 411(d)(6) generally prohibit any plan amendment that would decrease the accrued benefit of any
participant or the nonforfeitable percentage applicable to any participant.

Line a. If the plan’s vesting schedule is not being changed, check N/A. If the vesting schedule is being amended, for every employee
who is a participant on the amendment adoption date or the amendment effective date, whichever is later, the nonforfeitable percentage
(determined as of that date) of the participant’s right to the employer-derived accrued benefit may not be less than the participant’s per-
centage figured under the plan without regard to the amendment. For example, if a plan is being amended to replace a 2 to 6 year vesting
schedule with 3 year cliff vesting, a participant who has three years of service at the time of the amendment and elects to go under the
new schedule must be 40% vested in the amount accrued after completing their third year of service.
1.411(a)-8(a)

Line b. If the plan’s vesting schedule is not being changed, or if the schedule is being changed but the nonforfeitable percentage under
the amended schedule cannot, at any time, be less than the percentage determined under the old schedule, check N/A.
Although each participant’s nonforfeitable percentage, as of the amendment’s adoption or effective date, may not be less under the new
schedule than it would have been under the old schedule (see a., above), the new schedule may provide for lower nonforfeitable per-
centages in future years. For example, if a plan replaced a 3 year cliff vesting schedule with a 2 to 6 year vesting schedule, a participant
with two years of service on the date of the change could have 20 percent vesting after the change rather than the 0 percent vesting
before the change. However, when the participant earned a third year of service, the participant’s vesting would only be 40 percent under

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Page 11                                             CYCLE A Submission Period – 02/01/2015 – 01/31/2017
the new schedule  whereas it would have been 100 percent under the old  schedule. 

If this reduction in future vesting can occur, the plan must  provide that each participant who has completed 3 years of  service with the 
employer and whose nonforfeitable  percentage is determined under the new vesting schedule  may elect to have the nonforfeitable per-
centage determined  under the old vesting schedule. 

The plan may limit the period for this election, and the election may be irrevocable. 
IRC 411(a)(10)(B)

Lines c., d., e., f., and g. If the National Office of the IRS has  approved the amendment as being a retroactive amendment  which may 
decrease accrued benefits under Code section  412(c)(8), and section 302(c)(8) of ERISA, check N/A. 

Except as described below, No other plan amendment may decrease, either  directly or indirectly, the accrued benefit of any plan  partici-
pant. Plan provisions that may indirectly decrease a  participant’s accrued benefit include, but are not limited to,  those relating to years of 
service and breaks in service for  benefit accrual, and to actuarial factors for determining  optional retirement benefits. Any changes in the 
method of  determining optional retirement benefits are subject to the  protections of the anti-cutback provisions. Benefit changes are  not 
precluded. The plan must provide, however, that the  benefit available at any future date will not be less (with  respect to an individual 
who either before or after the  amendment satisfies the pre-amendment requirements for  such benefit) than the benefit accrued as of the 
date of the  amendment. 

“Section 411(d)(6) protected benefits” are benefits described  in section 411(d)(6)(A), early retirement benefits and  retirement-type sub-
sidies, and optional forms of benefit. A plan  amendment that has the effect of eliminating or reducing such  benefits (other than to the 
extent provided in regulations), with  respect to benefits accrued prior to the amendment, is treated  as an impermissible cutback of sec-
tion 411(d)(6) protected  benefits. The protection of section 411(d)(6) also applies in the  case of plan mergers, transfers, and transactions 
amending or  having the effect of amending a plan to transfer plan benefits.  1.411(d)-4 Q&As 1(a) & 2(a)(3). 

An optional form of benefit is a distribution form with  respect to an employee’s benefit that is available under the  plan and is identical with 
respect to all features relating to  the distribution form, including the payment schedule,  timing, commencement, medium of distribution, 
the portion  of the benefit to which such distribution features apply and  the election rights with respect to such optional forms.  Thus, to 
the extent there are any differences in such  features, the plan provides separate optional forms of  benefit. For example, a joint and 50 
percent survivor  annuity and a joint and 75 percent survivor annuity are  separate optional forms, regardless of whether they are  actuar-
ially equivalent. Likewise, a distribution that is  available in cash or in employer securities consists of two  separate optional forms of ben-
efit. A benefit payable at  different times (such as early or late retirement), or upon  the occurrence of different events or the satisfaction 
of  different conditions, consists of separate optional forms of  benefit. A pattern of repeated plan amendments providing  for substantially 
similar benefits in similar situations for  substantially consecutive, limited periods of time will be  treated as creating a protected optional 
form to the extent  necessary to carry out the purposes of section 411(d)(6).  For example, a pattern of repeated plan amendments  pro-
viding that a particular optional form of benefit is  available to certain named employees for a limited period  of time may result in that 
optional form being treated as  provided under the terms of the plan to all covered  employees without regard to the limited period of time 
and  the limited group of named employees. However, patterns  of repeated plan amendments adopted and effective before  July 11, 
1988 are to be disregarded in determining whether  such amendments have created an ongoing optional form  of benefit under the plan. 
1.411(d)-4 Q&A 1(b)
1.411(d)-4 Q&A 1(c)

The following benefits are among those not subject to the  protection of section 411(d)(6): ancillary life insurance  protection, social se-
curity supplements described in section  411(a)(9), the availability of loans (other than the  distribution of an employee’s accrued benefit 
upon default  under a loan), the right to make employee contributions or  elective deferrals, and the right to direct investments. 
1.411(d)-4 Q&A 1(d)

The  regulations  provide  that  under  certain  circumstances  protected  benefits  may  be  eliminated  or  reduced.  These  circumstanc  -
es include the situation where such an elimination  or reduction is necessary to retain qualified status  because of a change in law, 
provided the plan is timely  amended to comply with the change in law and section 7805(b) relief is granted. Also, pursuant to tran-
sition  rules  in  regulations  1.401(a)-4  and  1.411(d)-4,  certain  protected  benefits  may  be  eliminated  under  certain  circumstanc-
es in  order to comply with those regulations.  If a plan has more  than two joint and survivor annuity options which are  actuarially 
equivalent and otherwise identical (e.g., joint  and 50 percent, 75 percent, and 100 percent), it may  generally eliminate the options 
that fall between  the lowest  and highest survivor benefit percentages  (i.e., in this case,  the joint and 75 percent survivor annuity). 
A plan may also  eliminate the right to a future distribution in the form of  property (other than cash) if on plan termination a partic-
ipant  may  elect  to  receive  the  optional  form  of  benefit  in  the  specified  property. A  profit-sharing  plan  that  does  not  provide  for  an 
annuity option and that is terminated may be  amended to provide for the distribution of a participant’s  benefit upon termination in a 
single sum without the  participant’s consent provided the employer does not  maintain another defined contribution plan (other than 
an  ESOP). A plan may be amended to add an involuntary  cash-out provision or to change the threshold amount for  an involuntary 
cash-out. A plan may also be amended to  eliminate or change a provision for loans, to eliminate  provisions permitting transfers of 
benefits between plans of  the employer, to make certain de minimis changes in the  timing of benefits, and special rules that would 
permit the  transfer of benefits between defined benefit and defined  contribution plans. There are also special exceptions for  ESOPs.  
1.401(a)-4 Q&A 5
1.41 1(d)-4 Q&As 2, 3 & 8

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Page 12                                                                  CYCLE A Submission Period – 02/01/2015 – 01/31/2017
In general, a plan may not be amended to add or modify  conditions with respect to section 411(d)(6) protected  benefits if the amend        -
ment would result in any further  restriction. However, objective conditions may be added to  benefits that have not yet accrued and may 
also be added  to accrued protected benefits if permitted under the  transition rules or the permissible benefit cutback  provisions of the 
regulations. 
1.411(d)-4 Q&As 2,3, & 7

There are no exceptions to the protections of section  411(d) for plan terminations except as expressly provided  under the regulations. 
411(d)(6)
1.411(d)-3(b)
1.411(d)-4 Q&As 2, & 3

The following paragraphs describe the conditions under  which plans may be amended to restrict or eliminate  optional forms of benefit. 
1.411(d)-4 Q&As 2, & 3
   
A defined contribution plan does not violate the  requirements of section 411(d)(6) merely because the plan  is amended to eliminate 
or restrict the ability of a  participant to receive payment of accrued benefits under a  particular optional form of benefit for distributions 
with  annuity starting dates after the dates the amendment is  adopted if, after the plan amendment is effective with  respect to the par-
ticipant, the forms of payment available to the participant include payment in a single-sum distribution  form that is otherwise identical 
to the optional form of  benefit that is being eliminated or restricted. “Otherwise  identical” means that the single-sum benefit paid must 
be  identical in every aspect to the optional form eliminated or  restricted under other provisions of the regulations under  section 411(d)
(6) except with respect to the timing of  payments after commencement. 
1.411(d)-4 Q&A 2(e)

Under certain express requirements, the regulations  permit the elimination of optional forms of benefit in  connection with distribution 
event transfers and  employment change transfers of benefits from one plan to  another with a participant’s consent. The section 411(d)
(6)  requirements do not apply to amounts that have been  distributed. Amounts that are directly rolled over to another  plan under section 
401(a)(31) are considered distributed  under section 411(d)(6). Amounts that are distributable in  an eligible rollover distribution must be 
rolled over under  section 401(a)(31) to accomplish a distribution event  transfer (except for certain cases in which the entire  amount 
cannot be rolled over under section 401(a)(31),  such as cases in which a single-sum distribution option is  not available, or the partic-
ipant’s benefit includes an  amount attributable to basis under section 72 (generally,  after-tax employee contributions)). Where the en     -
tire  amount distributable cannot be rolled over, an elective  distribution event transfer under section 414(l) is permitted  if the participant’s 
entire nonforfeitable accrued benefit is  transferred by means of either an elective transfer of the  entire nonforfeitable accrued benefit 
under section 414(l)  or a combination of a contemporaneous section 401(a)(31)  transfer and a section 414(l) elective transfer. The  reg-
ulations also apply for distributable event transfers  between defined benefit plans and defined contribution  plans The right to distribution 
event transfers is an optional  form of benefit under section 411(d)(6). 

For transfers occurring on or after January 1, 2002,  section 411(d)(6) is not satisfied by an elective transfer that  occurs at a time at which 
the participant is eligible to  receive an immediate distribution of the participant’s entire  nonforfeitable account balance in a single-sum 
distribution  that would consist entirely of an eligible rollover distribution  within the meaning of section 401(a)(31)(C). Such  transfers 
must be accomplished by means of a direct  rollover under section 401(a)(31) and section 414(l)  elective transfers not permitted under 
the revised  regulation must be eliminated by an amendment within the  plan’s GUST remedial amendment period.
Announcement 2000-71
1.411(d)-4 Q&A 3(c)
 
The regulations permit the elimination of optional forms of  benefit in connection with employment change transfers of  benefits from one 
defined contribution plan to another with  a participant’s consent. The exemption applies for elective  transfers under section 414(l) of 
a participant’s entire  benefit under a defined contribution plan, that are made in  connection with certain corporate transactions (such 
as a  merger or acquisition) or in connection with a participant’s  change in employment status (for example, the transfer to  a different 
subsidiary or division of the employer, without  regard to whether the transfer constitutes a separation  from service) to an employment 
status under which the  participant does not accrue additional allocations under the  transferor plan, whether or not the participant would 
be  eligible for a distribution of the participant’s entire benefit in  a single-sum distribution that would be an eligible rollover  distribution. 
Such employment change transfers can be  made to a plan that is outside the employer’s controlled  group, to another plan of the same 
employer, or to a plan  that is maintained by another member of the employer’s  controlled group. The employment change transfer can 
be  made even if the participant’s benefit is not fully vested,  provided that the vesting schedule amendment  requirements of section 
411(a)(10) are satisfied by the  receiving plan. In order to be eligible for this employment  change transfer exemption, the transfer general-
ly must be  between defined contribution plans of the same type. To  the extent the benefits are transferred from a money  purchase pen      -
sion plan, the transferee plan must be a  money purchase pension plan. To the extent the benefits  being transferred are part of a qualified 
cash or deferred  arrangement under section 401(k), the benefits must be  transferred to a qualified cash or deferred arrangement  under 
section 401(k). To the extent the benefits being  transferred are part of an employee stock  ownership plan as defined in section 4975(e)
(7), the  benefits must be transferred to another employee stock  ownership plan. Benefits transferred from a profit-sharing  plan other 
than from a qualified cash or deferred  arrangement, or from a stock bonus plan other than an  employee stock ownership plan, may be 
transferred to any  type of defined contribution plan. 
Rev. Rul. 94-76
1.411(d)-4 Q&A 3(b)

A defined contribution plan may be amended to replace  the ability to receive a distribution in the form of marketable  securities as defined

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Page 13                                                                 CYCLE A Submission Period – 02/01/2015 – 01/31/2017
in section 731(c)(2) (other than  employer securities under section 402(e)(4)) with the ability  to receive a distribution in the form of cash. 
The right to  distributions from a defined contribution plan in the form of  cash, employer securities or other property that is not  marketable 
securities is generally protected.   
 
If a plan includes an optional form of benefit under which  benefits are distributed in the medium of an annuity contract   that provides for 
cash payments, that optional form of benefit may be modified by a plan amendment that substitutes cash payments from the plan for the 
distribution of the annuity contract, where those cash payments from the plan are identical to the cash payments payable from the annuity 
contract in all respects except for the source of the payments (i.e., timing and amount).     

A defined contribution plan that continues to offer a lifetime annuity form of distribution must purchase an annuity contract from an insur -
ance carrier in order to provide that optional form (and the plan may either distribute that contract to the participant or hold the contract 
as a plan asset from which it makes the payments to the participant). A defined contribution plan that gives a participant the right to an 
in-kind distribution (including employer securities and property that is not marketable securities) may be amended to limit the types of 
property in which distributions can be made to a participant to specific types of property allocated to the participant’s account at the time 
of the amendment (and with respect to which the  participant had the right to receive an in-kind distribution  before the plan amendment). 
A defined contribution plan  that gives a participant the right to a distribution in a type of  property may be amended to specify that the 
participant is  permitted to receive a distribution in that type of property  only to the extent that the plan assets allocable to the  participants 
account at the time of the distribution include  that type of property. 
1.411(d)-4 Q&A 2(b)

Pursuant to section 1.411(d)-4, Q&A 10 of the revised  regulations, an amendment to eliminate an age 70½  distribution option may apply 
only to benefits with respect  to employees who attain age 70½ in or after a calendar  year, specified in the amendment, that begins after 
the later  of December 31,1998, or the adoption date of the amendment. An age 70½ distribution option is an optional form of benefit 
under which benefits payable in a particular distribution form commence at a time during the period that begins on or after January 1 of 
the calendar year in which an employee attains age 70½ and ends April 1 of the immediately following calendar year.

A plan using this relief generally may not preclude an  employee who retires after the calendar year in which the  employee attains age 
70½ from receiving an optional form  of benefit that would have been available if the employee  had retired in the calendar year in which 
the employee  attained age 70½. The amendment must be adopted no  later than the last day of the remedial amendment period. 

VIII. Miscellaneous

Line a. A defined contribution plan will not be treated as  meeting the minimum vesting standards of section 411  (and, therefore, will not 
be a qualified plan under section  401 (a)) if under the plan the allocation of employer  contributions or forfeitures is discontinued or de-
creased  because of the attainment of any age. This rule is effective  for plan years beginning on or after January 1, 1988 with  respect to 
employees who have an hour of service in such  years. A plan will violate this requirement if optional forms  of benefit, ancillary benefits, or 
other rights or features that  are provided with respect to allocations attributable to  credited service prior to a certain age are not provided 
with  respect to allocations attributable to credited service after  that age. This requirement does not preclude a plan from  setting a cap 
or limit on the total employer contributions and  forfeitures that will be allocated to a participant’s account or  from limiting the total number 
of years of service that will be  taken into account in determining the amount of such  allocations, provided those limits are not directly 
or  indirectly tied to age. However, in applying any limitation  based on years of service, the plan may not take into  account years of ser-
vice prior to the effective date of this  rule (i.e., the first day of the first plan year beginning after  1987) that are disregarded in determining 
allocations to a  participant’s account because of the participant’s  attainment of any age. Also, if the plan determines  allocations using a 
service related allocation formula, then  for 1988 and later plan year allocations the plan may not  disregard, because of the participant’s 
attainment of any  age, any year of service completed by the participant. Continued allocations are not required where they would  violate 
section 415 or cause the plan to fail to meet the  integration requirements or to be discriminatory. 
Proposed regs. 1.411(b)-2

Line b. A plan will violate section 401(a), including section  401(a)(25) and section 411(d)(6), if it may directly or  indirectly deny a section 
411(d)(6) protected benefit  through the discretion of the employer or third parties, such  as plan administrators. (See section VII for the 
definition of  “section 411(d)(6) protected benefits”.) This does not  preclude a plan from conditioning the availability of benefits  on stated 
nondiscriminatory, objective standards (including,  e.g., availability of single sum distributions upon execution  of a covenant not to com-
pete) or prevent the employer from  exercising administrative discretion in determining whether  such standards have been met. A plan 
condition (such as  the plan’s level of funding) that is within the employer’s  discretion is not considered an objective standard. 
1.411(d)-4 Q&A 4, 5 & 6

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CYCLE A Submission Period – 02/01/2015 – 01/31/2017

Employee Benefit Plan

Minimum Vesting Standards Defined Contribution Plans
(Worksheet Number 2 – Determination of Qualification)
Instructions – All items must be completed. A “Yes” answer generally indicates a favorable conclusion is warranted, while a “No”
answer indicates a problem exists. Please use the space on the worksheet to explain any “No” answer. See Publication 6389,
Explanation Number 2, for guidance in completing this form.
The technical principles in this worksheet may be changed by future regulations or guidelines
Name of plan

I. Years of Service and Break in Service Plan Reference Yes No N/A
Note – Questions g. - k. do not apply to plans that use hours of service as a basis for determining service for vesting purposes. Questions a. - f. do not
apply to plans that use the elapsed time method of determining service. Questions I. - p. must be considered for all plans.
a. Does the plan designate a "vesting computation period"? [0202]
b. Is an employee required to complete no more than H hours of service during the
"vesting computation period" to be credited with a year of service? [0203]
c. Does the plan credit hours of service in accordance with Department of Labor (DOL)
Regulations? [0204]
d. If the plan credits hours of service for periods when no duties are performed, does
the plan incorporate, in its own words or by reference, the rules for determining and
crediting those hours? [0205]
e. Is a "break in service" defined as a vesting computation period when the employee
is not credited with more than B hours? [0206]
f. Does the plan credit service to the appropriate computation period in order to avoid
a break in service for employees on maternity or paternity leave? [0207]
g. Does the plan credit an employee with a period of service; beginning no later than
the employment commencement date and ending no sooner than the severance
from service date? [0208]
h. Does the plan determine an employee's total period of service by aggregating all
individual periods, unless the periods of service may be disregarded under the rule
of parity? [0209]
i. In determining an employee's period of service, does the plan also take into account
the service spanning rules? [0210]
j. Is a 1-year period of severance defined as a 12-consecutive-month period beginning
on the severance from service date and during which the employee does not
perform an hour of service for the employer? [0211]
k. Is the first period of severance ignored to the extent that such period is attributable
to maternity or paternity leave? [0219]
l. Are all years of service counted for vesting purposes, except as provided in Internal
Revenue Code section 411(a)(4)? [0213]
m. Are years of service with the employer before the participant entered the plan,
including years of service with the employer in noncovered employment, counted
for vesting purposes? [0214]
Thisn. Are years offormservice with otherismembersprovidedof a controlled group ofascorporations,anor example only and should not be
with trades or businesses under common control or with other organizations that
comprise an affiliated service group counted for vesting purposes? [0215]completed or returned to the Internal Revenue Service.
o. When the employer maintains the plan of a predecessor employer, does the plan
provide that service with the predecessor employer is counted as service with the
employer? [0216]
p. Is service of individuals who are leased employees of any controlled group or
affiliated service group counted? [0217]
Form 5623 (Rev. 4-2016) Catalog Number 42698K publish.no.irs.gov Department of the Treasury - Internal Revenue Service

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Page 2 CYCLE A Submission Period – 02/01/2016 – 01/31/2017
II. Vesting on Separation from Service-Return to Service Without Break in Service Plan Reference Yes No N/A
Note – in a plan that uses the elapsed time method of determining service for vesting purposes, a break in service is a 1-year period of severance.
a. Does an employee continue to vest, starting at the point in the vesting schedule
where the employee left employment, in both the pre-separation and post-
separation account balances? [0221]
b. If any part of the employee's account balance may be forfeited before the participant
incurs five consecutive one year breaks in service, does the forfeiture occur as the
result of a distribution on termination with opportunity for restoration as required by
regulations? [0290]
III. Vesting on Return to Service After a Break in Service Plan Reference Yes No N/A
If a participant separates from service, has a 1-year break in service and returns to service, does the plan provide the following with respect to a such a
participant once one year of service has been completed post return
a. If such participant does not have five consecutive breaks in service, both the pre-
break and post-break service will count in vesting both the pre-break and post-break
account balances? [0231]
b. If such participant has five or more consecutive breaks in service, both the pre-
break and post-break service will count in vesting the post-break account balances
if either (1) such participant has any nonforfeitable interest in the accrued benefit
attributable to employer contributions at the time of such separation from service or
(2) upon returning to service the number of consecutive breaks in service is less
than the number of years of service. [0232 and 0233]
IV. Contributory Plans-Complete Only if Plan Permits Employee Contributions
Plan Reference Yes No N/A
(Voluntary or Mandatory)
a. Does the plan identify what part of an account balance is attributable to employer
and employee contributions under Code section 411(c)(2)? [0241]
b. Are all account balances resulting from employee contributions fully vested? [0242]
c. Does vesting in accordance with statutory minimums apply separately to benefits
that resulted from employer contributions? [0243]
d. Is a forfeiture because of withdrawal of employee contributions precluded when the
employee is at least 50 percent vested in the account balances that resulted from
employer contributions? [0244]
e. If a plan permits a forfeiture on withdrawal of mandatory employee contributions
when an employee is less than 50 percent vested in employer contributions, does
the plan provide for restoration of forfeited amounts on repayment of withdrawn
employee contributions? [0245]
V. Cash-Outs and Other Distributions of Benefits That Result From Employer
Plan Reference Yes No N/A
Contributions
a. Distributions that cash-out an accrued benefit:
(i) In an involuntary cash-out, must the employee receive a distribution of the
present value of the entire nonforfeitable benefit that resulted from employer
contributions? [0252]
(ii) Are such distributions made because of the termination of the employee's
participation in the plan? [0253]
(iii) Is the value of the employee's account balance restored when the employee
repays the full amount of the distribution as provided by regulations? [0254]
This(iv) Does theformplan disregard serviceis providedonly for which an employee receivesaspayment?an example only and should not be
[0255]
completed or returned to the Internal Revenue Service.
b. Distributions that do not cash-out an accrued benefit:
(i) If the plan allows a distribution of a participant's vested interest on separation
from service (but before a break in service), are separate accounts or an
equivalent method established for the undistributed part of the pre-break account
balance and any post-break account balance? [0261]

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Page 3                                                                         CYCLE A Submission Period – 02/01/2016 – 01/31/2017
V. Cash-Outs and Other Distributions of Benefits That Result From Employer 
                                                                                           Plan Reference      Yes No                         N/A
Contributions – Continued 
(ii) Is the participant's vested interest in the account containing the undistributed 
       part of the pre-separation account balance (described in b(i)) determined under 
       one of the formulas prescribed by regulations? [0261]
c. Immediate distributions:
(i) Are immediate distributions, where the vested account balance exceeds $5,000, 
       precluded unless the participant (and spouse, if the qualified joint and survivor 
       rules apply) consents? [0264]
d. Normal retirement age in a pension plan:
(i) If the plan is a pension plan and the plan’s NRA is less than age 62, ask sponsor 
       to demonstrate that NRA satisfies ITR section 1.401(a)-1(b)(2). [0270]
e. If the plan is a pension plan and permits “in-service” distributions, are distributions 
permitted only to participants who have attained age 62? [0271]
VI. Vesting Schedule                                                                       Plan Reference      Yes No                         N/A
a. At all times does the plan's vesting schedule satisfy the requirements of a particular 
one of the two minimum vesting schedules described in Code section 411(a)(2)? 
[0272]
b. If a plan's vesting schedule is changed by a plan amendment, does the new vesting 
schedule satisfy any particular one of the vesting schedules described in Code 
section 411(a)(2)(B) for all years of service? [0272]
VII. Amendments Affecting Accrued Benefits and Vesting                                     Plan Reference      Yes No                         N/A
a. If the vesting schedule is being amended, is the nonforfeitable percentage of every 
participant not less than the percentage figured under the plan before amendment? 
[0281]
b. If the vesting schedule is being amended, does the plan provide for election of the 
former schedule by certain participants? [0282]
c. If the plan is being amended, is each participant's accrued benefit after the 
amendment not less than the accrued benefit before the amendment? [0283]
d. If the early retirement benefits or other optional retirement benefits are changed by 
an amendment, are the benefits with respect to the benefits accrued to the date of 
the amendment not reduced for any employee who at any time on or after the 
amendment satisfied the pre-amendment conditions for the benefit except as 
provided under the regulations? [0283]
e. If "section 411(d)(6) protected benefits" are eliminated by a plan amendment, are 
such protected benefits preserved with respect to benefits accrued as of the later of 
the adoption or effective date of the amendment except as provided under the 
regulations? [0283]
f.  No restrictions have been added to previously unrestricted benefits amendment 
except as provided under the regulations? [0283]
g. If a plan amendment eliminates a preretirement age 70½ distribution option, is it 
eliminated only for benefits with respect to employees who attain age 70½ in or 
after the later of (1) the calendar year specified in the  amendment, (2) the calendar 
year that begins after December 31, 1998, or (3) the calendar year that begins after 
the adoption date of the amendment? [0285]
This form is provided as an example only and should not be 
VIII. Miscellaneous                                                                        Plan Reference      Yes No                         N/A
a. Does the plan satisfy the requirement that allocations of employer contributions and completed or returned to the Internal Revenue Service.
forfeitures may not be discontinued or decreased because of the attainment of any 
age? [0287]
b. Are "section 411(d)(6) protected benefits" available to employees without regard to 
employer consent or discretion? [0289]

Form 5623 (Rev. 4-2016)    Catalog Number 42698K            publish.no.irs.gov    Department of the Treasury - Internal Revenue Service

- 17 -

                                                                     CYCLE A Submission Period – 02/01/2016 – 01/31/2017
                              Employee Plan Deficiency Checksheet
                                  Attachment Number 2
                              Minimum Vesting Standards
For IRS Use                   Please furnish the amendment(s) requested in the section(s) checked below.
     202    Section            of the plan should be amended to specify the 12-consecutive month period used to determine
     I.a.   whether an employee has completed a year of service for vesting purposes. DOL Regs. sections
            2530.200b-1(a) and 2530.203-2.
     203    Section            of the plan should be amended to specify the completion of no more than 1,000 (870 or 750)
     I.b.   hours of service in a vesting computation period to entitle an employee to credit for a year of service. IRC 
            section 411(a)(5)(A) and DOL Regs. sections 2530.200b-1(a), 2530.200b-3(e), 2530.200b-3(d)(1),
            2530.200b-3(f)(1), 2530.200(b)-3(d)(2), and 2530.200b-3(f)(2).
     204    Section            of the plan should be amended to credit hours of service in accordance with the applicable
     I.c.   DOL regulations. DOL Regs. sections 2530.200b-2(a), 2530.200b-3(e), 2530.200b-3(d)(3)(i), 2530.200b-3(d)(3)
            (ii), 2530.200b-3(f)(1)(i) and 2530.200b-3(f)(2).
     205    Section            of the plan should be amended to provide, either in its own words or by reference to
     I.d.   appropriate DOL regulations, the method of determining the number of hours of service to be credited and the 
            method of crediting the hours to the computation periods for periods during which no duties are performed. DOL 
            Regs. sections 2530.200b-2(b), (c) and (f).
     206    For purposes of vesting, section           of the plan should be amended to define a break in service as a 
     I.e.   vesting computation period during which the employee does not complete more than 500 (435 or 375) hours of 
            service. DOL Regs. sections 2530.200b-3 and 4 and 2530.203-2(d).
     207    Section            of the plan should be amended to provide that certain hours of service shall be credited to the 
     I.f.   appropriate computation period in order to avoid a break in service for employees on maternity or paternity 
            leave. IRC section 411(a)(6)(E).
     208    Section            of the plan should be amended to credit an employee with a period of service, commencing
     I.g.   no later than the employee's employment commencement date and ending no earlier than the severance from 
            service date. Regs. section 1.410(a)-7(b).
     209    Section            of the plan should be amended to provide that an employee's total period of service shall be
     I.h.   determined by aggregating all individual periods of service, unless such service may be disregarded due to the 
            rule of parity. Regs. section 1.410(a)-7(b)(6)(ii).
     210    Section            of the plan should be amended to provide that in determining an employee's period of
     I.i.   service, the service spanning rules should be taken into account. Regs. section 1.410(a)-7(c)(2)(iii).
     211    Section            of the plan should be amended to define a one year period of severance as a 12 consecutive
     I.j.   month period, beginning on the severance from service date, during which the employee does not perform an 
            hour of service for the employer. Regs. section 1.410(a)-7(d)(4).
     219    Section            of the plan should be amended to provide that the first period of severance shall be ignored 
     I.k.   to the extent that such period of severance is attributable to maternity or paternity leave. IRC section
            411(a)(6)(E)(iii).
     213    Section            of the plan should be amended to provide that all years of service are counted for vesting 
     I.l    purposes, except as provided in Internal Revenue Code section 411(a)(4). IRC section 411(a)(4).
     214    Section            of the plan should be amended to provide that years of service with the employer before a 
     I.m.   participant entered the plan, including years of service in noncovered employment, will be counted for vesting 
            purposes, unless one of the exceptions noted in 411(a)(4) applies. IRC section 411(a)(4).
     215    For vesting purposes, service with an employer must include the service for certain related employers for the 
     I.n.   period in which the employers are related These related employers include members of a controlled group of 
This formcorporationsis(withinprovidedthe meaning of section 1563(a),asdeterminedanwithoutexampleregard to subsectionsonly(a)(4) and (e)(3)and should not be 
            (C) thereof) and trades or businesses (whether or not incorporated) which are under common control. Service 
     completedmust also be countedorfor organizationsreturnedthat are a part oftoan affiliatedtheserviceInternalgroup under section 414(m).Revenue Service.
            Section            of the plan should be amended accordingly. IRC sections 414(b), (c) and (m) and Regs. 
            section 1.411(a)-5(b)(3)(iv)(B).
     216    Section            of the plan should be amended to give credit for service with the predecessor employer. IRC
     I.o.   section 414(a)(1).

Form 6041 (Rev. 4-2016) Catalog Number 43035F publish.no.irs.gov                  Department of the Treasury - Internal Revenue Service

- 18 -

Page 2                                                                              CYCLE A Submission Period – 02/01/2016 – 01/31/2017
       217      Service of any employee who is a leased employee to any employer aggregated under section 414(b), (c), or 
       I.p.     (m) must be credited for vesting purposes whether or not such individual is eligible to participate in the plan. 
                Section             of the plan should be amended accordingly. IRC section 414(m), Regs. Section 1.411(a)-5(b)
                (3)(iv) and Rev. Rul. 81-105, 1981-2 C.B. 256. 
       221      Section             of the plan should be amended to provide that an employee who separates from service and 
       II.a.    is reemployed prior to incurring a break in service will continue to vest, starting at the point in the vesting 
                schedule where he or she left employment, in both his or her pre-separation and post-separation accrued 
                benefit. Regs. section 1.411(a)-6.
       290      The plan may not forfeit nonvested amounts prior to the occurrence of five consecutive one-year breaks in 
       II.b.    service unless the forfeiture results from a distribution on termination of covered employment and an employee 
                who resumes covered employment is given the opportunity to repay the distribution and restore the forfeited 
                amount, within the period described in section 411(a)(7)(C) of the Code. Section                         of the plan should 
                be amended accordingly. IRC section 411(a)(7)(C) and Regs. section 1.411(a)-7(d)(4)
       231      The plan should provide that if a participant separates from service, has a one-year break in service and returns 
       III.a.   to service, after such participant has one year of service after returning to service, if such participant does not 
                have five consecutive one-year breaks in service, both the pre-break and post-break service will count in vesting
                both the pre-break and post-break account balances. Section                         of the plan should be amended 
                accordingly. IRC sections 411(a)(6)(B), (C), and (D) and Regs. sections 1.411(a)-6(c)(1) and 1.410(a)-7(d)(7).
     232, 233   The plan should provide that if a participant separates from service, has a one year break in service and returns 
       III.b.   to service, after such participant has one year of service after returning to service, if such participant has five or 
                more consecutive breaks in service, both the pre-break and post-break service will count in vesting the post-
                break account balances if either (1) such participant has a nonforfeitable interest in the accrued benefit 
                attributable to employer contributions at the time of such separation from service or (2) upon returning to service 
                the number of consecutive breaks in service is less than the number of years of service. Section                             of 
                the plan should be amended accordingly. IRC sections 411(a)(6)(B), (C), and (D) and Regs. sections 1.411(a)-6
                (c)(1) and 1.410(a)-7(d)(7).
       241      Section             of the plan should be amended to provide a method by which the portion of any account 
       IV.a.    balance attributable to employee contributions can be identified and distinguished from the portion attributable 
                to employer contributions. IRC section 411(c)(2) and Regs. section 1.411(c)-1.
       242      An employee's account balance that resulted from the employee's own contribution must be nonforfeitable.
       IV.b.    Section             of the plan should be amended accordingly. IRC section 411(a)(1).
       243      Section             of the plan should be amended to provide that vesting in employer contributions conforms
       IV.c.    to statutory required minimums and may not be offset by nonforfeitable rights to account balances that resulted 
                from employee contributions (which are always fully vested). TIR 1334(V-1).
       244      Section             of the plan should be amended to preclude forfeitures on account of withdrawal of employee 
       IV.d.    contributions when the employee is 50 percent or more vested in employer derived amounts. Regs. section 
                1.401(a)-(19).
       245      Section             of the plan should be amended to provide for the restoration of amounts forfeited on account 
       IV.e.    of withdrawal of mandatory employee contributions if the participant has less than a 50 percent vested interest 
                in employer derived amounts and the employee repays the full amount of the withdrawal. Regs. sections 1.411
                (a)-7(d)(2) and (3).
       252      An involuntary cash-out may not be an amount less than the present value of an employee's entire employer-
       V.a.(i)  derived nonforfeitable benefit at the time of the distribution. Section                 of the plan should be amended 
                accordingly. IRC section 411(a)(7)(B)(i) and Regs. section 1.411(a)-7(d)(4)(i).
       253      All cash-outs (voluntary or involuntary) must be made, or, in accordance with regulations, deemed to be made, 
       V.a.(ii) due to an employee's termination of participation in the plan. Section                         of the plan should be amended 
                accordingly. IRC section 411(a)(7)(B) and Regs. sections 1.411(a)-7(d)(4)(i), (ii) and (vi).
       254      A plan that provides for voluntary or involuntary cash-outs must contain a repayment provision if the employee 
ThisV.a.(iii)   formmay receiveisa distributionprovidedthat is less than the presentasvalueanof theexampleemployee's account balanceonlyand the and should not be 
                employee resumes employment covered by the plan. Upon repayment, the employer-derived benefit required to 
                be restored by the employer must not be less than the amount of the account balance of the employee, both the 
       completedamount distributed andorthe amountreturnedforfeited unadjustedtoby any laterthegains orInternallosses. Section          Revenue of the Service.
                plan should be amended accordingly. Regs. sections 1.411(a)-7(d)(4)(iv) and (v).
       255      Years of service for which a participant received a cash-out may not be disregarded for purposes of eligibility 
     V.a.(iv)   or position on the plan's vesting schedule. Section                         of the plan should be amended accordingly. IRC 
                sections 411(a)(7)(B) and (C) and Regs. section 1.411(a)-7(d)(4)(iii).

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Page 3 CYCLE A Submission Period – 02/01/2016 – 01/31/2017
261 Section of the plan should be amended to provide a method of computing account balances with
V.b.(i), (ii) respect to which vesting may increase in accordance with the provisions of Regs. section 1.411(a)-7(d)(5).
264 Section of the plan should be amended to preclude the immediate distribution of any benefit where
V.c. the present value of the nonforfeitable accrued benefit (taking into account benefits derived from both employer
and employee contributions) is in excess of $5,000, without the consent of the participant and when applicable,
the participant 's spouse. An immediate distribution means the distribution of any part of the benefit prior to the
later of age 62 or normal retirement age (the $5,000 threshold is determined without taking into account
employee rollover contributions into the employer’s plan).
270 Submit a demonstration that the plan’s definition of normal retirement age satisfies Reg. Section 1.401(a)-1(b)
V.d. (2), or amend section of the plan to provide a definition of normal retirement age that satisfies the
regulation.
271 “In-service” distributions by a pension plan are limited to participants who have attained age 62. Section
V.e. of the plan should be amended accordingly. IRC section 401(a)(36).
272 The vesting schedule should be amended to satisfy the requirements, at every point in time, of a particular one
VI.a., b. of the minimum vesting schedules described by IRC 411(a)(2) for all employees' years of service.
281 Where the vesting schedule is being amended, for every employee who is a participant on the amendment
VII.a. adoption date or the amendment effective date, whichever is later, the nonforfeitable percentage (determined as
of that date) of the participant's right to the employer-derived accrued benefit may not be less than the
participant's percentage figured under the plan without regard to the amendment. Section of the plan
should be amended accordingly. Regs. section 1.411(a)-8(a).
282 Section of the plan should be amended to provide that each participant who has completed 3 years of
VII.b. service with the employer and whose nonforfeitable percentage is determined under the new vesting schedule
may elect to have the nonforfeitable percentage determined under the old vesting schedule. Regs. section
1.411(a)-8T(b).
283 Section of the plan should be amended so that it does not reduce or restrict, either directly or
VII.c., d., e. and f. indirectly, the benefit provided any plan participant prior to the amendment except as provided under the
regulations. IRC section 411(d)(6) and Regs. sections 1.411(d)-3(b) and 1.411(d)-4.
285 Section of the plan should be amended so that it retains a preretirement age 70½ distribution option
VII.g. for employees who reach age 70½ in a calendar year prior to the later of the calendar year that begins after
December 31, 1998, or the calendar year that begins after the adoption date of the amendment.
287 Section of the plan should be amended so that allocations of employer contributions and forfeitures
VIII.a. will not be discontinued or decreased because of the participant's attainment of any age. IRC section 411(b)(2)
and Proposed Regs. section 1.411(b)-2(c).
289 A plan may not permit an employer, through the exercise of discretion, to deny a participant a section 411(d)(6)
VIII.b. protected benefit for which the participant is otherwise eligible. Section of the plan should therefore
be amended. See Q&As 8 and 9 of Regs. section 1.411(d)-4 regarding acceptable alternatives for amending the
plan without violating section 411(d)(6).

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Form 6041 (Rev. 4-2016) Catalog Number 43035F publish.no.irs.gov Department of the Treasury - Internal Revenue Service

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