Reinstated forfeitures after rehire

[Richard Anderson]

An employee terminates and receives a distribution of his vested account balance. The unvested account balance is forfeited. The participant is rehired two years later and repays the distribution. There are no current forfeitures to use to restore the participant's forfeited amount. The employer contributes the amount necessary to reinstate the participant's prior forfeitures.

Does the contribution used to reinstate forfeitures count toward the 404 deductibility limits? It would seem to me that it should not, since it was counted already for deductibility purposes when it was first contributed to the plan. This just reinstates the original contribution.

[This message has been edited by Richard Anderson (edited 09-05-1999).]

[LCARUSI]

I believe it counts - regardless of whether the forfeitures were reallocated or used to reduce a prior co contribution