Forfeiture allocation timing

[Guest EPS2]

401(k) Plan with SH and PS

Adoption Agreement says that forfeitures get allocated once a participant has been distributed his "entire vested benefit".

Participant gets paid out mid year, before the SH match is allocated. He won't get a PS allocation because the plan has a last day, 1000 hour rule.

The investment company automatically transfers the unvested money into a forfeiture account that does not accrue any interest, on 12/31/08 his statement shows -0-, but his Participant Certificate will show that he still has the safe harbor match as of 12/31/08.

Technically the participant is not paid out all the way because he still will be receiving a SH match contribuiton...right? Or is this not a correct statement.

Does his forfeiture get reallocated using 12/31/08 census data?...or must we wait until 12/31/09, after his SH match gets allocated to his account, and then he gets all the way paid out?

Any guidance would be appreciated.

Thank you.

[Jim Chad]

EPS2 First look at the doc to see whether you allocate at the end of the year of forfeiture or the year following forfeiture. These are the only two choices I have seen. But there may be other possibilities, also.

Your question is a good one. FWIW Here is a way to look at it that seems right to me. A participant has been distributed his "entire vested benefit", when there is no expectation of him receiving more money. In this case you are expecting him to receive more money.