Forfeiture erroneously not reallocated

[Guest Sponias]

A plan recently transferred to our TPA firm with a large forfeiture account balance (approximately $100,000). According to the document, forfeitures should be reallocated annually. We have no way of determining the last time the forfeiture account was reallocated but it is safe to say that it has been several years. To complicate things, we are only able to obtain information for the 2005 plan year. How do we reallocate the forfeiture account? Also, what penalties would result from failing to comply with the document?

[Ron Snyder]

Failure to comply with the plan's terms could result in the plan's being disqualified. If the client won't provide enough information to fix the problem, "just say no". The client is a problem and you are likely seeing only the tip of the iceberg.