PS Forfeitures - Annual Limits

[AndyT]

You are correct, forfeitures are not included in the deductibility limits. It's the same thing with a PS plan that uses forfs. to reduce - you can gross up the contribution, so that the net deposit is 15% and still pass 404(a).

------------------

Andy Treece

[BTH]

I have a situation where a small employer has contributed the close to the maximum 15% deductibility limit to their Profit Sharing Plan. On top of this, there is a fairly large forfeiture account that is to be re-allocated. As long as the 415 limit is not exceeded for individual participants, I can't see where this is a problem since the 15% is a deductibility limit and, of course, re-allocated forfeitures are not deductible. The plan states that forfeitures shall be "added to the employer contribution."

Any input would be appreciated.