Allocation of Forfeitures for a re-hired participant

[dmb]

A terminated, partially vested particpant who received a full distribuition in 2001 (calendar year ps plan) was then rehired later in 2001 and entitled to a contribution. Would they also be entitled to share in forfeiture allocation??

[BeckyMiller]

This sounds trite, but you have to look at your plan document. The language about re-entry of former participants is frequently found at the end of the allocations section or in the vesting section. (Though it could be where ever the drafter chose to put it.)

In my experience, eligibility to share in forfeitures generally follows the same rules as eligibility for an employer contribution.

Note that if they terminated without a break-in-service many documents will treat them as if they never left for purposes of eligibility to share in allocations.

This is kind of a weird result in today's world where distributions are processed so quickly. Theoretically, a participant can share in his or her own forfeiture.

When processing this person, remember the payback rules.