Plan Expenses

[Guest stevena1]

1. If a plan is designed so that forfeitures pay for plan expenses, can a plan use that forfeiture account to pay surrender charges to move the plan to another carrier? (I am thinking no, it just feels wrong)

2. If a plan is set up as safe harbor nonelective, in any given year, could the plan be amended to give the SH contribution to Non-Key employees only? The client is worried about potentially having a "bad year" financially, and is looking for relief in that situation.

As usual, thanks for your input.

[Blinky the 3-eyed Fish]

1. Why does it feel wrong when the forfeiture account is just going to reduce an employer expense they would otherwise incur? So then I would say yes you can do it. My only concern is if they are directed accounts and HCE's are reaping a disproportionate benefit of having the expenses paid for them.

2. Non-highlies only, not non-keys, is possible.

[Guest stevena1]

Thanks Blinky.

Would the amendment to exclude the non highs have to be done before the plan year starts each year? if so I am thinking that it is kind of pointless....?

What I am thinking is that they will design the plan to include everyone in the SH, but they just want the option to exclude themselves (the two keys are the only HCEs) if they have a bad year.

But, they wont know they have a bad year, until, obviously, the end of the year.

Could they then amend the plan, even though they had already accrued the benefit?

thanks!