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  1. Hi all, When should a previously forfeited ESOP balance be restored to an employee’s account? Should the forfeited balance be restored upon return? After a year of service? Retroactively to the day of return after a year of service? I’ve confirmed with the Admin that it’s eligible for restoration. I left at 0% vested and my entire balance was forfeited. I returned a year and a half later, and have put in a full year of service since. There is nothing specific that I can find in the document. It states, “Forfeitures: Some participants will terminate employment before they are fully vested in all of their Accounts. The portion of those Accounts that is not vested is called a “forfeiture.” Forfeited benefits will be used to pay Plan expenses or added to the Company’s contributions and allocated to eligible participants’ Accounts. If you are rehired by an Employer after your non-vested Account has been forfeited but before you have five consecutive one-year breaks in service, you are eligible to have the amount of the forfeiture restored to your Account. If you received a distribution of the vested portion of your Account, you must pay back to the Plan the amount of your distribution to have the forfeiture restored. Whether you repay the distribution or not, your prior vesting service will be counted for vesting your Account.” The timing of the restoration makes a rather huge difference in this case, since the appreciation of the balance through 2020 is significant. I returned in February 2020 but my shares were only restored in March 2021. My thinking is since I didn’t receive a distribution at termination, I would have been fully “repayed” upon rehire and immediately eligible for restoration. If not specified in the document, is there a standard to follow? Is there somewhere else in the document I should check?
  2. We have an employee that took a cash distribution early in 2017. Employee has since been rehired and wants to restore her account as there was enough non vested monies forfeited to warrant the restoration. I'm all good with the employee sending back the entire amount and us restoring her account. No real problem there. My question is really for me as I am curious. What about the 20% withholding already done on the cash out? A 1099-R will be sent on the cash out. How does the employee rectify or "get back" the withholding? I'd assume at tax filing of her 2017 taxes, but I don't know. Maybe she doesn't get the taxes "back"... Just curious.
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