What to do with forfeitures that exceed contribution formula?

[John A]

If the forfeitures of a target benefit or money purchase plan exceed the contribution formula amount, what is done with the forfeitures that exceed the amount? Can they be placed in a suspense account? Does it matter if the forfeitures exceed the formula amount because the plan sponsor made an actual contribuiton in addition to the forfeitures?

[Kirk Maldonado]

Hire an ERISA attorney to give you an opinion as to what to do with the surplus and pay his fees out of the plan. That should eliminate any surplus.

[Guest JimJ]

Nice one Kirk. I got a good chuckle out of that one. Not to mention it is a day we all need to find something to laugh a little.

Could it not be held over and applied the following year? Let it sit in a stable account, earning interest, and use it for fees or the next years contribution. The plan will need to be restated soon, that should cost a little. I am sure many others with much more experience will have a better answer.

[Erik Read]

In the my past life as an admin, we held the surplus in a suspense account until the next year - need to be sure and release in the next plan year though - we had a few that went without relase until review by supervisor - had to make some swift changes. Be sure you somehow flag that plan for careful review in the next year.