When calculating the 15% contribution limit, can forfeitures first be deducted from the total contribution and then 15% be contributed?

For example, 15% of eligible compensation is $50,000. Forfeitures of $1,000 can be used to reduce the contribution. Can I calculate a total contribution of $51,000 so the actual contribution being deposited ($50,000) does not exceed the deduction limit?

Thanks.

Yes. If forfeitures lower the contribution, then the deductible amount is the contribution less forfeitures.

this expands upon Richard's comment:

Forfeitures are not considered an employer's contribution in the year and do not count toward the 15% (or 25%) deduction limitation.

Even in a year where the forfeitures are in excess of 15%, the employer can still make a deductible contribution to the profit sharing plan.

Forfeitures are taken into account in determining the maximum annual additions applicable to individual accounts.

Hello.......quick question?

New to the work field. Stay home mom. Nothing in retirement or SS. What percentage should I expect my employer to contribute to my pension plan????? I am in the seattle area..where wages and benefits are great!.

thanks for any help!

Marla

To Marla:

The information you've provided is not sufficent to answer your question. You need to get more specific information, in particular precisely what type of "pension" plan it is, and what the requirements are for you to receive a contribution. Specific types of plans included Profit Sharing, 401(K), ESOP, Pension (Defined Benefit, Money Purchase, Target Benefit, Cash Balance - a type of Defined Benefit Pension).

To answer this, you should ask for a copy of the "Summary Plan Description ("SPD") Booklet" from your company's personnel department. This should answer your question, or at least get you started.

Please take note of "catches" in the requirements. It is common to exclude employees by job classification, or by part time/full time status. You also need to look at the "vesting" section.

Once again, you should start by getting the SPD and reading it. Hope this helps.

No offenes to Marla, but why the he-- is she asking that question under this thread? It has nothing to do the topcic!!

Dude, i think she is destined to become an infamous "lost participant".

I agree with everything above regarding forfeitures. But, FIRST READ THE PLAN. The document will tell you what to do with forfeitures. Then you can plan the amount of the employer's contribution accordingly