Allocation of Forfeitures in Frozen MPPP

[chris]

Any idea how to handle the allocation of forfeitures in frozen MPPP where the formula was amended to 0% of compensation? The TPA firm may or may not have read the allocation provision of the plan document which allowed for forfeitures to be used to pay plan admin. expenses. In any event the TPA firm allocated forfeitures on the basis of compensation or they might have used current acct. balances over total acct. balances to make the allocation. Have tried to convince client to terminate the MPPP to get it out of the way, but to no avail. Any suggestions appreciated.

[WDIK]

Does the document language only allow forfeitures to be used to pay administrative expenses or reduce employer contributions?

[Tom Poje]

what does the document say regarding forfeitures. the formula may be 0% for the money purchase, but if forfeitures increase contribution then I would think you would allocate comp to comp (or pay expenses as you indicated)

[Guest b2kates]

Why are there forfeitures. I thought reducing contribution rate to 0 results in a partial termination. This would vest all participants fully at that time.

[Blinky the 3-eyed Fish]

I think you are thinking of the discontinuance of contributions in a non-pension plan that causes the "continuing and substantial" criteria to be violated. This does not apply to pension plans, like money purchase plans. Thus, the mere freezing of a MP plan will not cause a partial termination.

[chris]

As Tom pointed out the doc. does actually allow for the allocation of the forfeitures on a comp to total comp basis. Thanks.