Schedule I & Forfeitures

[Guest rachd]

If forfeitures are distributed from the plan to pay plan expenses (as allowed by the plan document), how is this accounted for on the Schedule I?

Thanks,

Rachel

[Archimage]

As "Other Expenses".

[Guest rachd]

Ok, another problem with forfeitures...

The employer contributed employer dollars to some employees who were found to be ineligible at the end of the year (not enough service hours). So, a negative contribution was done for these employees and that amount went into the forfeiture account (to be used to reduce the employer contribution- in the next plan yr).

How do I account for this amount on the 5500? Would it not be considered part of plan assets? I don't know if I'm having a bad day or what but I'm not getting anywhere trying to figure it out on my own.

Thanks for your help,

Rachel

[Archimage]

I am assumming that this contribution is a discretionary profit sharing contribution. The full amount should be shown as the employer contribution on the 5500. However, there is no forfeiture as a result of the calculation including ineligible employees. You will need to allocate the full amount of the contribution in accordance with the plan document. This is not forfeiture money.

[Guest rachd]

So, it would still be considered an employer contribution even if it wasn't actually given to those participants?

[Archimage]

If the contribution was deposited in 2004 you could reclassify that part as a contribution for 2004. If you do this then you would not include it on the 5500 for 2003.