Match Forfeitures

[Guest ELS]

We have a client who added the Safe Harbor feature to their plan effective with the 2000 Plan year. They have chosen the match contribution to satisfy the safe harbor requirement. Prior to the 2000 Plan year they were making match contributions subject to a vesting schedule. Our firm assumed responsibility for this client at the tail end of the 2000 Plan year.

The client had approximately $10,000 in match forfeitures available for use throughout the 2000 Plan year. Their plan document provides for match forfeitures to be used to reduce future match contributions. During the 2000 Plan year, the client used these forfeitures to reduce the amount paid out of their Corporate checking account towards their safe harbor match contribution.

Any thoughts on problems associated with using non-safe harbor forfeitures to reduce the amount paid out of pocket for a safe harbor match contribution? We have always used available forfeitures in this situation to reduce contributions of the same source (match forfeitures from match subject to vesting used to offset future match contributions subject to vesting).

[actuarysmith]

I would think that there should be no problem with this - it's just that they are converting these forfeitures into 100% vested safe-harbor contributions.