Plan terminated several years ago, forfeiture balance

[Guest Iwonder]

It seems a plan was terminated several years ago. Although it was once an orphaned plan it is orphaned no more and the participants are receiving their distributions from the recently rediscovered plan administrator.

There is a problem is with a forfeiture account.

Forfeitures were permitted for contributions in the same year in which the forfeitures occured, but forfeitures were not to be used to pay plan expenses.

There is a balance in a forfeiture account. Because the plan was terminated years ago, there is no plan to amend.

Company would like to use remaining forfeiture assets to pay any fees that may be charged against the remaining ppt accounts in the future, until all distributions are made.

Any words of wisdom will be greatly appreciated.

[QDROphile]

If the plan has assets it can be amended.

[Kimberly S]

If the assets were not fully distributed within 12 months of the termination resolution, the plan was NOT terminated.

[Kevin C]

By orphaned, do you mean that the plan sponsor ceased to exist?

If the amount involved is fairly small, it may not be practical to do an exact correction. How much is in the forfeiture account? How many active participants in the plan when those amounts were forfeited? How many still have balances?

If there are still forfeitures left over at the end, then somewhere along the line, the terms of the plan were not followed. The first steps I would take are to try to determine who the forfeited amounts came from and if those amounts were properly forfeited. Keep in mind that a partial termination or termination of the plan may change the vested percentage of those who forfeited these amounts. If the forfeitures don't end up being restored to those who forfeited them, what should have happened to those forfeitures and when?