Forfeitures in Plan

[Guest Golden Girl]

Does the same use of forfeitures rules for 401k plans also apply to 403(b) plans?

The current 403(b) document provides that forfeiture are allocated to participants in the plan year following the year of the forfeiture. The sponsor would like to change so they have more discretion and can keep money in the forfeiture account in the case of a required reinstatement by a rehired employee (apparently this happens!)

I told client that the money in the forfeiture account as of the beginning of they year has to be used for the current year but they have already funded and do not want to allocate more to participants.

But then I remembered this is a 403b plan and we work mostly with 401k plans.

Does anyone know if the same rule applies to 403b plans?

Thanks!!

[ETA Consulting LLC]

Does the same use of forfeitures rules for 401k plans also apply to 403(b) plans?

The current 403(b) document provides that forfeiture are allocated to participants in the plan year following the year of the forfeiture. The sponsor would like to change so they have more discretion and can keep money in the forfeiture account in the case of a required reinstatement by a rehired employee (apparently this happens!)

I told client that the money in the forfeiture account as of the beginning of they year has to be used for the current year but they have already funded and do not want to allocate more to participants.

But then I remembered this is a 403b plan and we work mostly with 401k plans.

Does anyone know if the same rule applies to 403b plans?

Thanks!!

This appears to go to a 'definite predetermined formula' requirement in IRC Section 401(a). We know that when an employer makes contributions to a 403(b), certain rules under 401(a) are envoked (in certain instances). If it's a church or public school (gov't employer), then 401(a)(4) won't apply; nor does the vesting rules of Section 411; incorporated into 401(a)(7). I cannot trace a direct link, but would not dream of doing this if the employer is a non-profit who is not a church or a government (for no reason other than the vesting rules not applying to churches or gov'ts). The answer, then, would appear somewhat debateable if the employer is actually a church or gov't since all the rules aren't applicable (it 'may' be okay).

Sorry, I cannot give a more definitive answer, but that's the best I could find.

Good Luck!