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Vested balance exceeds actual account balance

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We are coming across issues where the vested balance is more than the actual balance for certain rehires.

Im waiting on the details, but in a nutshell:

  • Participant terminates in 2021 at 20% vested and takes a partial distribution.
  • Participant is rehired in 2022 and is 60% vested at 12/31/23.
  • Relius says that the vested balance is more than the actual balance in the account. 

Any ideas?



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Was there a forfeited amount that was removed from the participant's account upon payment of the partial distribution, and the forfeited amount was added back into the calculation of the current vested amount but the forfeited amount was not in fact restored to the participant's plan account?


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On upon a time I knew the formula to fix this.  BUT if you go into DER, Account Data, and start futzing around with "Prior Years Distribution $" I am almost postive you're going to get that dollar amount to move.  You can probably figure out with a little high school algebra how much each $1 of Prior Years Dustributions moves the vested balacne and thus back into what value will fix it.  The formula is based on the formula in 6.5(h) of the Relius/Corbel Basic Plan Doc. I included the screenshot. The formula should be from the regs.  If you plug this formula into Excel you can figure out what the entry needs to be.  I think it might be a negative number too.

partial vesting.png

Austin Powers, CPA, QPA, ERPA

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