Your forearm should be perpendicular to the line of your stroke, if you're using a pendulum stroke. That way the tip is in line with your stroke at the moment of impact, rising up to meet the contact point prior to impact and falling after impact. The line of your stroke just happens to be the line of your cue stick at impact.
Unless... Let's say you're using a very soft stroke (but still pendulum) and a well-elevated cue. The maximum velocity of your forearm is going to come when the forearm is vertical (give or take), which occurs after your forearm is perpendicular to the cue. If your forearm at impact is perpendicular to the cue, your cue is still accelerating after the stroke (with a true pendulum stroke) and you may strike the cue ball again with the follow through. With that in mind, you may want to address your stroke so impact occurs at the pendulum moment rather than the perpendicular grip moment.
I think it boils down to doing what feels more natural and gives better results. If the tip hits where you wanted to hit, and your speed is right, and your line is right, well, whatever you're doing is working, right?