Sounds simple, I know.
Assume the following:
DC plan with 5-year graded vesting.
Vesting service is defined as calendar year with 1,000 hours.
Following 2009 plan year, participant is 60% vesting.
Participant completes 1,000th hour in April, 2010.
Under this scenario, the participant will certainly get his additional 20% vesting for 2010 and will be 80% vested following the 2010 year. Nothing (not death, termination of employment, or burning the office down) will change that. Having completed a year of service for 2010, the participant will receive vesting credit for the year. But WHEN?
Specifically, if the participant wishes to take an in-service distribution in May, 2010, he obviously cannot take a distribution of the unvested portion. But how vested is he at that moment in May? Is he 80% vested because he's already completed 2010's 1,000 hours? Is he 60% because 2010's not over yet?
Sal's got an example on page 4.73 that's implying that either approach is permissible (although recommending crediting of the additional 20% immediately upon completion of the 1,000 for the sake of administrative hassle), but I was hoping for something more authoritative. Surely this is an issue that somebody's had to deal with on a practical level, before!
Any thoughts?