Forfeiture buy back rules

[Brenda Wren]

I have a rehired participant who would like to "buy back" his forfeiture. Does he have to repay his employee deferral in addition to his employer monies to buy back the forfeiture? The document doesn't seem to make a distinction between the money types, so I would assume the answer is yes.

[FundeK]

Can you post the section of document that addresses this? Is this a prototype, volume submitter? I have seen documents written to only require pay back of the er monies, or the entire account balance. If the document really doesn't say, I would think the Plan Sponsor could "interpret" and apply it uniformly. If this is the case, it would be beneficial for them to put the "policy" in writing to be kept with the plan document.

[ccassetty]

According to the ERISA Outline Book, a plan may not require the participant to repay deferrals in addition to the vested portion of the employer money in order to have their account balance reinstated. He references Reg. 1.401(k)-1©(1)(ii).

[Harwood]

My ERISA Outline Book has Sal hedging a bit on the issue [deferral payback "would seem to violate the rule under §1.401(k)-1©(1)"].

He also says that if you have an approved plan document that requires payback of the deferrals, then the deferrals need to be paid back also.

[Kirk Maldonado]

Treasury Regulation Section 1.401(k)-1©(1)(ii) provides:

The [section 401(k)] contributions are disregarded for purposes of applying section 411(a) to other contributions or benefits.

[Brian Gallagher]

Our plan (Corbel prototype) says that only the employer contributions and employer match need be paid back.

[Harwood]

My Corbel prototype says that the Rehired must repay "the full amount which had been distributed". The SPD produced by the Corbel software states that the rehire must "repay the entire amount of the distribution." I can't find any references or Adoption Agreement options regarding limiting the payback to employer contributions.

[Guest RJM]

Our current McKay Hochman prototype requires repayment of "full amount of the distribution attributable to both Employer contributions and Elective Deferrals." Sample SPD says "repay the amount you received" A prior (pre-GUST) McKay CODA prototype required repayment of only Employer Contributions.