A cash balance plan is newly effective 1/1/2009. The vesting service is credited from the plan's effective date forward, and the vesting schedule is 3-year cliff.
The plan sponsor wants to amend the vesting schedule for 2010 to include all years of employment. The question is, does this affect the participants that terminated non-vested in 2009? Would they have to go back and pay those participants their vested accrued benefit assuming they had 3 or more years of total service? Or would it only affect the participants in 2010 and going forward?

The amendment is effective in 2010. If the sponsor wants to make it retroactive, they can choose to do so. But it is not required.

Unless the amendment runs afoul of the nondiscrimination requirement of 1.401(a)(4)-5 that the timing of a plan amendment not discriminate significantly in favor of HCEs or former HCEs, which is a facts and circumstances determination.

The psychic friends network senses some uncertainty about the intent.

Is a new cash bal plan allowed to exclude service before the effective date for vesting?

I find articles (tax facts) saying no but they seem to come to a conclusion based upon the regs, not a specific reg statement that I can find.

Thank you