An article from one of the news sources I enjoy about retirement plan news, had an article about whether vesting can be controversial? Not really, the rules are the rule and the question is whether employers want to offer a better schedule such as immediate vesting to maintain and recruit employees.
Vanguard’s recent “How America Saves” report stated that nearly half of plans immediately vested participants in employer matching contributions, while 25% of plans with employer matching contributions used a 5- or 6-year graded vesting schedule. As a former employee, I’m surprised with how many plan sponsors actually immediately vest and wonder why I didn’t work at a place like that.
I find nothing controversial about vesting because ultimately, the Internal Revenue Code will require immediate vesting at one point. That’s what history points to, I’ve seen older plans when the original schedule for vesting was 10 years. Over time, the rules have curtailed the years necessary and I think there will be a day in my life when 100% vesting is mandated.