Nonvested Employer Contributions

[erisa29]

When a non or partially vested contribution is made to a 403(b) custodial account what are the practical implications to the custodian/record keeper?

[Lou S.]

The practical implications generally come when you are paying someone out who is not fully vested.

[QDROphile]

The record keeper usually is expected to keep track of the vesting.

[AMDG]

In addition, unvested amounts in a participant's account should be treated under the Plan as a separate contract to which section 403© (or another applicable provision of the Internal Revenue Code) applies. For most 403(b) recordkeepers, this is form over substance -- participants do not have two distinct accounts between which amounts are transferred once vested.