Subst. risk of forfeiture?

[Ken Davis]

A new employee negotiated a deferred comp plan that defers $X per year of employment. If the employee stays at the University until he becomes vested in the state teachers retirement system, the deferred comp plan benefits evaporate and he forfeits the $X earned per year. If he leaves for any reason before vesting in the TRS, he receives the deferred comp. I don't think the deferred comp is subject to a substantial risk of forfeiture. Agree or disagree?

Thanks,

Ken Davis

Univ. of South Alabama

[John Feldt ERPA CPC QPA]

What you have described looks like reversed substantial risk of forfeiture. I assume you are talking about 457(f).

If I read this right, his termination (for any reason) currently triggers 100% vesting - thus no risk of forfeiture (and thus taxable now). But, if the termination occurs after a specific future date, it triggers 0% vesting?

I don't think termination of employment is allowed anymore under the rules to trigger 100% vesting. I'd like to see others comment. I am not sure when this becomes effective.