Fee from forfeitures, rather than by participants

[Guest Iwonder]

Plan fees were paid from forfeitures, although the plan provides that fees are to be paid from participant balances. This was done last year.

Forfeitures are to be used for making additional nonelective discretionary contributions or discretionary match contributions.

It is possible to "reverse" the expense so that the fees are paid by the participants, and the forfeiture account is restored (with interest).

If this is done, could the restored forfeitures be used for additional employer contributions?

Is this an acceptable self correction? It would appear to be, but what are consequences to watch out for?

Thank you

[Bill Presson]

Before I did a lot of work "correcting" this, I would do a little on a spreadsheet to see what the net impact was to a handful of employees.

Because you basically went to the forfeiture account, deducted fees, allocated forfeitures and ended up with a participant account balance.

What should have happened is look to the forfeiture account, allocate forfeitures, deduct fees and end up with a participant account balance.

Do some and see how far off you are. You might be able to do a nominal correction; rather than reversing and reposting everything.

[Guest Iwonder]

Before I did a lot of work "correcting" this, I would do a little on a spreadsheet to see what the net impact was to a handful of employees.

Because you basically went to the forfeiture account, deducted fees, allocated forfeitures and ended up with a participant account balance.

What should have happened is look to the forfeiture account, allocate forfeitures, deduct fees and end up with a participant account balance.

Do some and see how far off you are. You might be able to do a nominal correction; rather than reversing and reposting everything.

Thank you for the great advice.