We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
What is a Nonforfeitable Account Balance? Legal Definition and Implications
Definition & Meaning
A nonforfeitable account balance refers to the funds in a retirement or savings account that cannot be lost or forfeited. This term is primarily used in the context of federal retirement plans, specifically those governed by subchapter III of the U.S. Code. These balances are protected under certain conditions, ensuring that account holders retain their funds even if they leave employment or stop making contributions.
Table of content
Legal Use & context
The term "nonforfeitable account balance" is commonly used in federal retirement law, particularly in relation to the Federal Employees Retirement System (FERS). It is relevant in various legal contexts, including employment law and retirement planning. Understanding this term is crucial for individuals managing their retirement accounts, as it affects their financial security and planning options. Users can utilize legal templates from US Legal Forms to create necessary documents related to retirement accounts.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: An employee who has contributed to a federal retirement account for five years decides to leave their job. Their nonforfeitable account balance ensures they retain the funds they have accumulated, regardless of their employment status.
Example 2: A worker who has not met the minimum service requirement for vesting may have a forfeitable balance, meaning they could lose some or all of their contributions if they leave their job before a certain period. (hypothetical example)
Relevant laws & statutes
The primary statute governing nonforfeitable account balances is found in Title 5 of the U.S. Code, specifically sections 8431 through 8432, which outline the rules for federal retirement plans. These sections detail the conditions under which account balances become nonforfeitable.
Comparison with related terms
Term
Definition
Difference
Vested Balance
Funds that an employee has a right to keep, regardless of employment status.
All nonforfeitable balances are vested, but not all vested balances are nonforfeitable if they are subject to conditions.
Forfeitable Balance
Funds that may be lost if certain conditions are not met, such as leaving a job before a vesting period.
A nonforfeitable balance is secure, while a forfeitable balance may be lost under specific circumstances.
Common misunderstandings
What to do if this term applies to you
If you have a nonforfeitable account balance, it is essential to understand your rights and options regarding your retirement funds. You should:
Review your account statements and documentation to confirm your balance status.
Consult with a financial advisor or legal professional if you have questions about your retirement options.
Explore US Legal Forms for templates that can help you manage your retirement planning effectively.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.