PMC Posted December 4, 2008 Posted December 4, 2008 Individual terminated employment from Co. A less than 100% vested, forfeiture then created and rolled over the distribution to Co. B's plan. Individual is reemployed by Co. A and wants to buy back and restore his account, recontributing the amount of the distribution ('ER $). When the individual recontributes to Co. A's plan is that amount placed in the employer contributions source? Or would it be considered a rollover from Co. B's plan and placed in that source and would it satisfy the buy-back?
JanetM Posted December 4, 2008 Posted December 4, 2008 If I recall, it has been a while since I did one, we put that part of the r/o back into ER source and the rest in r/o. Then the forfeitures are put in ER souce to make them how and vesting adjusted so they will continue to grow to 100% in ER source. JanetM CPA, MBA
PMC Posted December 5, 2008 Author Posted December 5, 2008 Thanks Janet. Follow-up question- In order to restore the forfeiture the employee must recontribute the amount of the distribution. Since the time this individual rolled over their distribution to Co. B's plan the amount of the distribution from Co. A' plan has decreased in value. Does this employee now have to make up the difference with an after-tax contribution and tracked as such in the Plan? I assume the plan would have to permit after-tax contributions. If the plan sponsor doesn't want to do this, then the participant is essentially out of luck and the forfeiture can't be restored?
JanetM Posted December 5, 2008 Posted December 5, 2008 Not sure about AT part, but the participant is out of luck if the plan does not allow reinstatement of forfeitures. Tom Poge can you chime in? JanetM CPA, MBA
QDROphile Posted December 5, 2008 Posted December 5, 2008 The participant is not out of luck. The participant is entitled to restoration. The restoration can be conditioned on buy back. If the plan insists on buy back, it cannot refuse to take after tax money.
Lou S. Posted December 5, 2008 Posted December 5, 2008 The participant is not out of luck. The participant is entitled to restoration. The restoration can be conditioned on buy back. If the plan insists on buy back, it cannot refuse to take after tax money. I agree 100%. We rarely see it happen but it sometimes it does and now you have to track the after tax basis in a plan that might not normally have after tax money. In cases like this we setup an after tax source for the participant just for the buy back so we know to track the basis.
JanetM Posted December 5, 2008 Posted December 5, 2008 QDRO what if the plan does not include participant returning the distributed ER funds. JanetM CPA, MBA
QDROphile Posted December 5, 2008 Posted December 5, 2008 Foreitures are are restored. Typically restoration is from other forfeitures or the employer has to contribute.
BG5150 Posted December 8, 2008 Posted December 8, 2008 Foreitures are are restored. Typically restoration is from other forfeitures or the employer has to contribute. Usually this is stated in the section of the plan that deals witht he restorations. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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