Reversion of unvested employer contributions in an ERISA 403(b) plan.

[Guest JPotosky]

What are the rules regarding unvested 403(b) contributions made by an employer to an employee's account. If an employee terminates and must relinquish the unvested portion of the 403(b), what are the general rules. Can they be returned to the employer's accounts or must they be used for the benefit of the employee's?

[mbozek]

Unlike qualified plans there are no rules regarding disposition of forfeitures in a 403(b) plan because there is no tax deductible contribution. The employer is free to make any allocation of forfeitures as long as the 415 limits are not exceeded and there is no discrimination in favor of the HCEs or use the forfeitures to reduce future contributions.

[Guest JPotosky]

Does this mean that an employer can take nonvested forfeitures and use those dollars for the general use of the association instead of being used to defray the cost of the plan?