Attributable to match forfeitures due to failed ADP test

[Guest 401kadmin]

How and when are attributable to match (ATM) forfeitures due to failed ADP test allocated when the plan has immediate vesting for matching contributions? The plan uses the corbel prototype doc, so the item selected for forfeitures of matching contributions is "N/A. Same as above or no matching contributions." The method of forfeiture allocation listed above is "allocated to all Participants eligible to share in the allocation in the same proportion that each Participants Comp for the plan year bears to the Comp of all Participants for such year." Allocating the ATM based on this formula results in several small account balances. Is this the correct method?

[No Name]

If the match is 100% vested, how do you have forfeitures? It would seem you mean "what do you do with the match attributable to the protion of the refund". I think you give it to the participant and include it on a 1099-R.

[Tom Poje]

ugh, you have to follow the regs which says that attributable match MUST be forfeited.(It never matters if these amounts are vested or not) It would certainly be nice if the document said forfeitures could be used to pay plan expenses, but that doesn't sound like what you have. I don't have a copy of the Corbel checklist handy, so I don't know if there is an item buried somewhere that gives you an option like 'forfeitures resulting from attributable match due to excess contributions will be used to....'

Ugh. it sounds like you may be stuck with small amounts in the profit sharing accounts, if your document says that is how you handle any forfeitures.

Oddly enough, if you could figure out a way to make the ACP test fail you could distribute the money, since you are allowed to correct ACP failures before the ADP failures. for instance, assuming document allows it, for testing comp use full year comp rather than comp from date of entry.

[Guest Judy S]

The Corbel prototype always allows employers to pay expenses with plan assets, including forfeitures.