Mirox Company (Mirox) sponsors the Mirox Company Retirement Plan (Retirement Plan) for its employees. The Retirement Plan is a calendar year plan with plan entry dates of January 1 and July 1. The Retirement Plan uses calendar years to determine years of service for purposes of vesting. Mirox employees become eligible to participate in the Retirement Plan after completing one year of service and attaining age twenty-one. The Retirement Plan is a defined benefit plan that has a five-year cliff vesting schedule. The Retirement Plan also has adopted the rule of parity for purposes of excluding prior years of vesting service.

In addition to the Retirement Plan, Mirox sponsors two other employee benefit plans. The Mirox Employee Health Care Plan (Health Plan) is available for employees who are regularly scheduled to work thirty or more hours per week. Mirox sponsors the Mirox Company Nonqualified Deferred Compensation Plan (Deferred Comp Plan) for the company president. Under the terms of the Deferred Comp Plan, upon attainment of age 65 Mirox will pay the president $8,000 per month for life. If the president terminates employment prior to age 65 and is employed by a competitor of Mirox within two years of termination of employment, no benefits will be paid to the president from the Deferred Comp Plan.

A. The vice-president of sales, who has worked at Mirox as a full-time employee for three years, learns of the Deferred Comp Plan. He demands to be admitted to the Deferred Comp Plan as a participant. Must Mirox include the vice-president as a participant in the Deferred Comp Plan?

B. The president terminates employment with Mirox to go to work for Mirox's closest competitor, Xorim Corporation. At age 65, the former Mirox president demands that her benefits commence under the Deferred Comp Plan. Must the Deferred Comp Plan pay the promised benefits?

C. Sally, age 23, is a part-time word processor for Mirox. Sally begins employment on February 1, 2019. Sally is regularly scheduled to work 100 hours per month. By November 30, 2019, Sally has completed 1,000 hours of service. She demands to be admitted as a participant in the Retirement Plan and the Health Plan. Is Sally entitled to participate in these employee benefit plans? If so, when? (Answer and explain with respect to each plan.)

D. Sam, age 52, is a part-time janitor for Mirox. Sam begins employment on March 1, 2019. Sam is regularly scheduled to work 80 hours per month. During the initial twelve-month period after his employment commencement date, Sam works his eighty regularly scheduled hours each month. In addition, Sam works twenty overtime hours in both of the months of April and June and receives payment for sixteen hours of vacation time in August. Is Sam eligible for the Retirement Plan? If so, when will Sam become a participant in the Retirement Plan?

E. Refer to the facts regarding Sam in Question D above. Assume that Sam has these hours of service for the following calendar years:2020 = 9602021 = 9602022 = 1,0202023 = 1,0502024 = 1,0152025 = 1,025Sam terminates employment on January 1, 2026. What percentage of Sam's benefit is vested under the Retirement Plan's five-year cliff vesting schedule?

Note-The five-year cliff vesting schedule is described in Code Section 411(a)(2)(A)(ii). Under a five-year cliff vesting schedule, the participant is not vested in any portion of the participant's benefit under the plan until the participant has attained five years of vesting service. Upon attaining five years of vesting service, the participant immediately becomes fully (100%) vested in the benefit under the plan. See Code 411(a)(2)(A)(ii); ERISA 203(a)(2)(A)(ii).