Disclaimer -- I have done no research on this issue, but I thought I'd start here in case anyone has dealt with a similar claim.

Plan has 7 year scheduled vesting, beginning with 20% after 3 years service. E/ee quits after only 2 1/2 years. Asks for full e/er contribution so she can roll it over into IRA. When told she is 0% vested, she claims no one ever told her about vesting requirements and she'd been under assumption that 100% was hers from Day 1. Further claims that at 1st and 2nd year annual performance review, supervisor had gone over pay package and told her that $x was being contributed to her account, with no reference to the vesting.

I understand that the plan can't just waive the vesting requirements b/c of a misunderstanding with this e/ee; however, I wonder if she might have a valid contract claim that she was to receive the contribution and never told that the vesting was a requirement? Has anyone dealt with a claim like this before?

TIA!

Did the participant receive an SPD?

Having a little experience with similar situtions, a few questions. Did they give out an SPD? Does she have documentation on her claims about money being contributed to her account? Does she have an employment contract that addresses the contributions? Does she have a written review that addresses the contributions?

I can tell you that documentation, or lack thereof, is very important. I'm sure we all know of a person who might say they were told something and deserve money, when no such statement was ever made. (He said She said...) Regardless of how honest "she" claims to be, can she prove that she was told these things? That will be critical.

Basically, the terms of the plan are the terms of the plan. They can not be changed or superseded (normally) by verbal or written agreements that are contrary. While she may have a "case" on other issues (failure to provide SPD), I don't believe she has a case with the plan's vesting.

There is a long line of cases starting with the Met life case which hold that only the plan and SPDs can be used to determine participant's rights because they are required under ERISA. Other inconsistent communications cannot be applied to determine rights under a plan. If participant received an SPD (which should have been issued), the vesting schedule would have been stated, which would dispose of any claim of reliance on the supervisor's statements, even if the participant did not read the SPD.

In any event participant's only option is to file a claim for benefits with the plan administrator who can deny the claim because the P was not vested under the terms of the plan.

This MUST be a defined benefit plan because ALL DC plans must have at least a 2/6 vesting schedule since 1/1/2007.
Take the request for benefit as a request for a statement, required to be given if requested. This should show accrued benefit and vesting. An SPD should be given also for good measure.
Since she was told what her contribution was, this must be a Cash Balance plan.
If plan vesting is based on hours, saying she worked 2 1/2 years is not relevant, need hours per plan year (or whatever the doc/spd says).

If I am wrong on any of these issues, get this plan to an ERISA attorney or good TPA because it has some really BIG problems.

Depending on timing and plan requirements, it's possible to get 3 years of vesting service within about 25 months of employment. Without more information, you cannot assume that she is 0% vested.

I agree with Kim--make sure you accurately calculate years of service. Also, what's the scoop on the accelerated vesting scedule requirements that went into effect with plan years beginning in 2007? This person may already be vested under that schedule.

Doesn't the TPA for the plan show the total and vested amounts on quarterly/annual statements. You didn't specify but I am guessing the is PS plan. As rcline pointed out the vesting was changed to max 20%/6yr.

It could be a DC plan with a 7 year vesting schedule. The faster vesting provisions in PPA had delayed effective dates for collectively bargained plans and leveraged ESOP's with outstanding loans that were in existence on 9/26/2005.

And, of course, the faster vesting schedule could have been applied on a prospective basis for new money only.