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Lost earnings from Forfeiture account


JKW

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A plan had a missed deferral opportunity - which they corrected with the 50%,etc. There is a lost earnings amount of approx. $50. Is it ok if they plan takes is from the forfeiture account? I think not but I am seeing conflicting info. Their document states forfeitures can be used to offset plan expenses and reduce employer contributions. Thoughts?

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I don't recall, but a) I think EPCRS will say and b) will it make any difference? I mean, are there other employer contributions that can be offset, thus making it a zero sum decision? So if the employer uses the $50 in forfeitures to reduce this correction or $50 to reduce the match, the employer still saves $50.

I generally try to avoid answers like this that don't answer the question posed, but I went and did it anyway...

Austin Powers, CPA, QPA, ERPA

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I felt bad, so I went looking for the answer:

Section 6.02(4)© in EPCRS

For some strange reason I cannot copy and paste...

I typed in this link, so you might have to copy and paste to your browser...

www.irs.gov/irb/2013-04_IRB/ar06.html

Short answer is that you can use forfeitures towards the correction if forfeitures can be used to offset employer contributions.

Austin Powers, CPA, QPA, ERPA

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