Forfeiture of Benefits
Some common provisions relating to forfeiture of benefits in unfunded deferred compensation plans include:
- Termination of employment prior to a specified vesting date, if the plan contains vesting provisions.
- If employee terminates prior to attaining normal retirement age, death, or disability.
- If employee terminates and enters into competition with the employer.
- If employee is terminated for "cause."
Forfeiture provisions usually will be included only if the amounts deferred are supplemental benefits provided by the employer; normally the employee would not voluntarily defer current compensation if there is risk that he or she will forfeit those amounts (however, as discussed below, deferral plans for tax-exempt organizations often must include forfeiture provisions).
Read more about this topic: Nonqualified Deferred Compensation
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