Forfeitures

[Guest Lawrence_Groves]

I have a client who wants to have the forfeitures reduce administrative expenses and allow the client to either supplement employer contributions and / or matching contributions or reduce employer and / or matching contributions. Has anyone seen this kind of flexibility built into a document

[Guest blaum8]

Yes, but ordinarily the document is drafted not as providing choice, but to provide a sequence in the manner forfeitures are used. As an example, the document could say forfeitures will be used to 1) pay expenses; 2) reduce matching contribution amounts; and 3) as additional discretionary contributions. Then if there are no expenses to be paid, then the next application would be for use as matches.

On the other hand, I'm not aware of a prohibition that would permit the employer to choose the use on an annual basis so long as the forfeitures were uniformly allocated when that use is selected.

[QDROphile]

Would you have a determinable allocation formula if you left it up to year by year discretion? I agree that you can have an ordering priority that includes all the options.

[Blinky the 3-eyed Fish]

Our document provider has the sequence mentioned, but also the statement that the forfeitures can be used in a current or future year. It has an approval letter.