Plan Administration Information
Using Elapsed Time to Calculate Vesting (Service) for the Defined Contribution Plan (including the DC portion of hybrid)
Unless otherwise adopted by the employer, defined contribution plans earn service based on elapsed time. Elapsed time looks at only the date of hire and date of termination to calculate time toward meeting vesting.
Example: If an employee has a hire date of 10/1/2013 and termination date of 10/5/2014, one year of service is earned toward vesting. If the termination date was 9/15/2014, no service would be earned.
Elapsed time has been applied to all active participant records. Participant who were terminated prior to October 2015 will have service calculated based on when contributions were reported by their employer in each month. When applying service credit from defined contribution to defined benefit, months can still be applied to help a participant reach their defined benefit vesting. When applying service toward a defined contribution record from a defined benefit or another defined contribution plan, all time (by months) will be considered, although only full year increments count to reach vesting.
MERS-to-MERS Service Coordination for Defined Contribution (include the DC portion of hybrid)
Employees who would like to verify MERS-to-MERS time for inclusion in DC service should contact the MERS Service Center at 800.767.MERS (6377) or fill out and submit the MERS-to-MERS Service Verification Form (md-016). MERS-to-MERS time will only apply before a DC distribution is taken or a forfeiture occurs, ensuring that employers will not incur future liabilities.
Forfeiture Rules
MERS will initiate a forfeiture of non-vested funds from former employees after a period of five years has passed from the date of termination.
However, any participant with a termination date of January 1, 2017 or later who has not met the requirements to become vested in their employer contributions will forfeit non-vested assets after a period of one year or a withdrawal of his or her entire vested account balance has occurred. MERS-to-MERS or Act 88 time may be used to meet vesting requirements as long as the time is earned before the forfeiture occurs. Additionally, time earned at the former employer may be used toward vesting and eligibility at a future MERS employer.
Forfeitures are pulled four times per year – February, May, July and November.
Quick Enrollment
When enrolling an employee in the MERS Defined Contribution Plan, employers should use this quick enrollment form (MD-000) which reduces the amount of information an employee is asked to provide in order to enroll. Additionally this form lessens the amount of time and administrative oversight needed to enroll your employees into the DC plan.
Submitting New Hire Information to MERS
To begin reporting for a new hire, simply add them to your payroll file. For more information on the new hire communication process, select your program and look under the administration section for new hire. Please remind your new hires that they need to complete and submit beneficiary information to MERS as soon as possible. Here is the link to our beneficiary form (form MD-703).
