Forfeitures with cross testing

[pmacduff]

I did find a thread on this, but after reading through it, I'm not sure it answers my particular question. I have a small amount of PS forfeitures ($2653). My Corbel doc says forfeitures are allocated with Employer contributions. Plan is cross tested with only 2 rate groups, one for owner & one for all others. Plan is large, has other HCEs (not owners) and has no trouble passing any of the 401(a) tests. The client has given me a dollar amount to allocate. If my staff group has an overall allocation rate of 3.67% which includes forfeitures, then I can give my owner up to 11.0% (3.67*3), correct? Now Relius allocated the forfeitures comp to comp, is that a problem? Or do I have to figure those forfeitures out with the cross testing and allocate by individual meaning hand keying all forfeiture transactions? If I don't then my %tages are ok and all tests pass. Thanks in advance

[Tom Poje]

taking a stab at it:

I don't think it is truly clear how to handle forfeitures in a class allocated plan - one of those fairly new animals.

however, suppose in your example the company had set up two plans - one for each class. (I honestly believe that is why class plans are allowed - you could accomplish the same thing setting up separate plans)

now, if you had forfeitures, what would happen? They would simply remain within each class itself. I don't know if that is possible to run easily on Relius.

But another way of looking at it, would simply to say forfeitures reduce contributions. In other words, forfeitures get tossed into suspense rather than showing them allocated to participants. mentally my mind can handle that, though I know some clients like to see forfeitures 'reallocated' so to speak.

I suppose if the document says forfeitures increase contributions you may conceivably have a problem, but I would argue the following (example only):

class 1 got 9%, class 2 got 3%. without forfeitures I would only hav run

8% and 2.67% so I have indeed increased my contribution by forfeitures. I am simply not showing people as receiving 'forfeitures', but rather as a contribution

[pmacduff]

Thanks Tom for the reply. Relius gave everyone the same .07% allocation of forfeitures. This just means that my owner got more in allocated PS to get him to 11.0%, but he was already getting more because of the cross testing, so I think I'm ok. I suppose another way to look at it would be: if I allocated the forfeitures using the cross tested method (giving a higher %tage to the owner) and then allocated the PS to reach my goals (3.67% for staff & 11.0% to owner) then the owner would have a lower allocation of PS and still receive the same total $ amount. Different means to the same end with the total dollars allocated !