Forfeitures of terminated plan.

[Guest HD]

A client is terminating their plan. The forfeitures are used to reduce current and future employer contributions. If the forfeitures at 12/31/99 exceed the employer contribution necessary for 1999, what happens to the remaining forfeitures? Do they go back to the employer or what?

[LCARUSI]

What does the plan document say?

[Guest HD]

O.K. I'm going to plead ignorance. The client uses a plan document by Trust Consultants, Inc. I can't find anything in the document about forfeitures upon termination of the plan. If anyone is familiar with that document, please direct me to the section where it is addressed. I would greatly appreciate it. Thanks!

[John A]

In your case, when are/were participants made 100% vested (due to the plan termination) and why are there forfeitures?

[Guest HD]

John, the plan terminated effective October 17, 1999. At that time, all employees still employed by the client became 100% vested. There were employees that terminated prior to October 17th that were not 100% vested. It is their forfeitures that are still in the plan. We are not talking about a lot of money, probably between $2,000-2,500. I just want to make sure that everyghing is done correctly. The participants are in pooled investments and we are trying to get the plan valued and all participants paid out as soon as possible.

[Guest ANNEBV]

I don't have any cites in front of me, but I believe there are rules regarding plan terminations and full vesting that state that all participants with account balances (regardless of date of termination) at the time of the plan termination must be made fully vested.

[imchipbrown]

How about a simple plan amendment allocating the forfeitures on a salary ratio? Might make the document "individually designed" but most sentient life forms would see an approved plan with a simple amendment.

[Guest HD]

The employer cashed out a number of participants earlier in the year who had terminated with an account balance of less than $5,000. I agree that a participant that has not been paid out becomes 100% vested. The forfeitures are coming from those who have already been paid out this year.