Balance restored after repaying dist

[ESOP Guy]

We have a PS plan. A person terminated was paid out fully a few years ago and was forf. They have been rehired and everyone agrees he could repay his distribution and get the amounts forf back when he was paid out restored.

We use the Relius document.

As I read the base document it looks like the restore should be funded in this order:

1) current forf

2) current plan earnings (this is a pooled asset plan)

3) current contributions

Can you really use the earnings from a pooled plan? There aren't enough current forf. I always thought the employer just had to kick in more money to the plan if the current forf were not large enough. I am having a hard time wrapping my mind around the idea I can take earnings from the other people which is going to include people who did not benefit fromt he orginal forf.

[ESOP Guy]

bumping back towards the top.... any thoughts out there?

[QDROphile]

Use of earnings form the pooled assets distorts investment return allocation. Despite some earlier IRS authority to the contrary, some roviewers are currently taking a very strict approach about allocations. We never new how much distortion was permissible under the existing authority. I personally don't like the plan provision. It would never be any any of my plans. I doubt that anyone would get in trouble for disregarding it, esspecially if the ifduciary determines that it is contratry to ERISA or jeopardizes qualification.

[Tom Poje]

well, 1.411(a)-7(d)(6)(iii)© says you are permitted, but who pays attention to the regs anyway.

[ESOP Guy]

Thanks Tom learned something new today.

I don't know if I have ever seen a case where the doc allowed it or the current year's forf weren't large enough. But in this case both appeared to happen.