Forfeiture of Benefits

[Randy Watson]

Can a tax exempt 457(b) plan forfeit a participant's benefit if they are terminated for cause? We are talking about employer contributions (not sure if that makes a difference). It's an odd situation. The plan provides for full and immediate vesting, but allows a forfeiture for termination for cause.

[TLGeer]

Can a tax exempt 457(b) plan forfeit a participant's benefit if they are terminated for cause? We are talking about employer contributions (not sure if that makes a difference). It's an odd situation. The plan provides for full and immediate vesting, but allows a forfeiture for termination for cause.

The answer to your specific question is yes. What effect the clause has on the plan's operations is more difficult to answer.