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erisa29

Nonvested Employer Contributions

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When a non or partially vested contribution is made to a 403(b) custodial account what are the practical implications to the custodian/record keeper?

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The practical implications generally come when you are paying someone out who is not fully vested.

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In addition, unvested amounts in a participant's account should be treated under the Plan as a separate contract to which section 403© (or another applicable provision of the Internal Revenue Code) applies. For most 403(b) recordkeepers, this is form over substance -- participants do not have two distinct accounts between which amounts are transferred once vested.

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