Opinion ID: 731269
Heading Depth: 3
Heading Rank: 1

Heading: Vested Status in 401(k) Plan

Text: 10 The district court found that Jefferson was not fully vested in Vickers' 401(k) Plan at the time of his termination. This finding constitutes a conclusion of law. John Morrell & Co. v. United Food and Commercial Workers Int'l Union, 37 F.3d 1302, 1303 (8th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 2251, 132 L.Ed.2d 259 (1995). It is therefore reviewed de novo. Sawheny v. Pioneer Hi-Bred Int'l, Inc., 93 F.3d 1401, 1407 (8th Cir.1996). 11 Under the terms of ERISA, a vested right is one that is nonforfeitable. See, e.g., 26 U.S.C. § 411(a)(2). Vickers' 401(k) Plan required employees to have five years of service with the company before vesting. There is no dispute that at the time of Jefferson's termination, he had worked for Vickers for four years, eight months and fifteen days. Since Jefferson had not completed five years of service, he had not vested and therefore forfeited the employer contributions to his 401(k) account. 12 Jefferson argues that the Vickers plan does not meet the minimum vesting standards set by Congress. Section 203(b)(2)(A) of ERISA provides: 13 [T]he term year of service means a calendar year, plan year, or other 12-consecutive month period designated by the Plan ... during which the participant has completed 1,000 hours of service. 14 29 U.S.C. § 1053(b)(2)(A). 15 Jefferson's position is that under the latter provision, if a participant completed 1000 hours of service in the 12-consecutive month period designated by the Plan, he or she would accrue one year of service for vesting purposes. Jefferson argues that he is entitled to credit for a year of service even though he was not employed for an entire twelve-consecutive month period because he had performed over 1000 hours of service since his last employment anniversary date. In essence, Jefferson contends that ERISA itself requires qualified pension plans to determine vesting by calculating an employee's hours of service rather than the time elapsed since employment. 16 This argument ignores the Treasury Regulations which expressly allow use of the elapsed-time method. See 26 C.F.R. § 1.410(a)-7. The argument Jefferson makes here has already been rejected. ERISA was a carefully considered statute, and if its framers had intended to wipe out the elapsed-time method of computing pension entitlements we think they would have chosen a more conspicuous method than the obscure wording of the definitional provision on which [the plaintiff] relies. Coleman v. Interco Inc. Divisions' Plans, 933 F.2d 550, 552 (7th Cir.1991). We agree. We conclude that ERISA allows vesting to be calculated by either the hours of service method or the elapsed-time method. The Vickers plan had selected the elapsed-time method, and Jefferson had not fulfilled the plan's vesting requirements. 17