Forfeitures Used to Make Correction?

[Guest shelterps]

Due to plan error, some participants missed matching contributions. The plan wants to make-up the missed contributions using forfeitures. The plan document allows use of forfeitures to offset matching contributions, so that seems okay. Plan also wants to use forfeitures to cover participants' missed investment gain on missed contributions. Is this a legitimate use of forfeitures? Thanks.

[WDIK]

The language in the plan document is th key, not what the "plan" [i assume you mean plan administrator] wants.

[masteff]

The plan document allows use of forfeitures to offset matching contributions, so that seems okay.

Just adding to what WDIK wrote... What's the exact wording of the plan? Does it explicitly say "matching contributions" or does it say something broader like "contributions of the employer"?

[pmacduff]

our client's was profit share and not match...but we just had a client go through an IRS audit and the reviewer allowed the contribution correction for the participants who were missed (there were only 2) to be taken from the plan's forfeiture account along with the associated earnings. I know the profit share is discretionary, but thought it interesting that this was an acceptable fix to the IRS. This plan stated that ps forfeitures are allocated along with any current contribution declared.