what to do with forfeitures

[Gudgergirl]

401(k) plan provides for profit-sharing contribution and matching contributions - both with 6 year graded vesting schedule.

Plan has decided to stop making profit-sharing contributions and make a more generous match.

Lots of plan participants have small partially vested profit-sharing accounts and employee turnover is high therefore there are frequent profit-sharing forfeitures.

Plan doesn't want to allocate p-s forfeitures in the same manner as their p-s contribution because the cycle of people with small partially vested accounts will continue.

Is it permissible to use profit-sharing forfeitures to reduce the matching contribution?

Other solutions?

[Jim Chad]

You may need to amend the document. But it is legal to use PS forfeitures to pay part of a match contribution, if that is what the document says to do.

[Below Ground]

Many plan already have language that allows for the flexibility Jim notes. You may find it already there.

[jpod]

If all else fails you can use the forfeitures to play plan administrative expenses, assuming the plan document gives you that flexibility.