Forfeiture Allocation

[Guest Sara H]

An employee is eligible to make deferrals but doesn't and therefore does not receive an employer match. Does this employee receive forfeitures of matching money resulting from an employee terminating?

Forfeitures of matching contributions are "allocated to all Participant's eligible to share in the allocations in proportion to each such Participant's Compensation for the year". I can't decide whether the employee WOULD receive the money because he was eligible to participate in the plan and chose not to, or if he WOULDN'T receive it because he wasn't deferring any money. Any thoughts? Thanks.

[LCARUSI]

You quoted the following:

"allocated to all Participant's eligible to share in the allocations in proportion to each such Participant's Compensation for the year"

It sounds like this is a plan which provides for an annual profit sharing contribution in addition to the match and the language. And the provision regarding forfeitures is based on the provision for allocating the annual contribution (if any). If that is the case, the employee gets a share assuming he/she meets ALL the criteria for a share of the "allocation" - for example, there might be a requirement for minimum hours, or that the employee be active on the last day of the year etc. Check the document.

You should also check the document to be sure there is not a separate provision relating to the forfeiture of matching contributions.