The technical principles in this publication may be
changed by future regulations or guidelines.
Department of the Treasury
Internal Revenue Service
Document 6389 (Rev. 10-2001)
Catalog Number 45133E
The purpose of the Worksheet Number 2 (Form 5623)
and this explanation is to identify major problems in the
area of plan vesting. However, there may be issues not
mentioned in the worksheet that could affect the
The worksheet applies only to plans to which Internal
Revenue Code section 411 applies, except plans
mentioned in section 411(e) (such as governmental
plans) and plans that cover participants who are
employed in maritime or seasonal industries.
Generally, a "Yes" answer to a question on the
worksheet indicates a favorable conclusion while a "No"
answer signals 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 worksheet.
The sections cited at the end of each paragraph of
explanation are to the Internal Revenue Code, the
Income Tax Regulations, 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 vested 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 requirements even though language
about a requirement for years of service is not found in
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