FAQ 66: Allocations--Restoring Forfeitures for terminated participant


Is there a clean way to restore forfeitures to a participant's account? I have a participant that took a full distribution and forfeited her entire employer source in 2003. She was rehired and terminated again, however, she is now partially vested. I need to move the amount that forfeited from the 2003 Forfeiture account to the participant's account and process a distribution. Any suggestions?


Assuming you know the forfeited amount that needs to be restored, enter a transfer-out transaction (23) for the forfeiture employee. If you want the money to go into the same forfeiture fund for the participant, just enter the corresponding transfer-in transaction (type 3) for the participant - no trading required (make sure both 3s and 23s have purchase dates).

If you want the fund to be invested according to the participant's investment election, you could enter a rebalance using the plan level function and select only that source.

Another option is to use the Forfeiture (allocated) transaction, a type 32, instead of the transfer-in transaction. This could be used with a 23 or an Amount Forfeited transaction (type 34) from the forfeiture employee.

Which ever sets of transactions you use, you are basically transferring out of the forfeiture employee back into the restored participant, and as long as you use corresponding transactions you should be okay.