Forfeitures in daily valued plans.

[Guest Giovanni]

With daily plans, should the non-vested portion of a participant's account balance remain in the investment funds chosen by the participant or moved to a money market fund after the participant has been paid out?

[RCK]

I don't think that there is a "should" answer to the question--you can do whatever works best for you. We leave it in the fund it was in until it is forfeited. Then it goes to a Money Market fund until it is used to pay expenses, or allocated to participants.

That works well for us, but I'm sure there are plans that move it immediately.

[Alf]

We have always moved it immediately since we switched to daily valuation. Forfeitures in our plan occur when a participant takes a distribution, so that is when we move the money and use that account to offset employer contributions.

[Erik Read]

Consider this - forfeiture assets become property of the plan at the time of distribution. At that point - the trustee's become responsible again for those assets - and we fall back to the "prudent man" rule.

I think the answer to your question is, what would the prudent man do with those assets until the again become participant directed?

From a fiduciary standpoint - I would hope that the funds available in the plan were considered prudent to begin with, so I wouldn't have a problem leaving the assets in the existing funds, on the other hand, if the assets remain are/were part of an individually directed "brokerage" account, and the trustee's had absolutly no influence on the stocks choosen - I would move the assets to a "stable value" or money market fund.

Don't forget - ultimatly, someone has to be responsible for the assets - and if the participant is no longer able to direct them, then the trustee becomes the fall guy.

Good Luck.

[TPAVP]

We generally allocate the forfeitures back to the originating investment. If the particpants receiving the forfeitures wish to transfer the money later on, that is always an option, but we have found that they usually just leave them where they are. It works well for us because you don't have to actually move the money.

[Guest Jeff V]

We save them up for Friday happy hour.

(just kidding)

We move them to Stable Value Fund, then use them to pay plan expenses at the end of each month.