forfeiture used for offset vs. reallocation

[Guest ghal]

This will be easiest using an example:

profit sharing plan

not top heavy

company intends to make no employer contributions for 2012

pro rata formula

currnet year forfeiture or $10,000

the document allows for the forfeiture to offest contributions (they do not want to use it to pay fees)

Solution: In my mind the client makes a $10,000 contribution and offsets it with the $10,000 in forfeitures. Goal accomplished.

The record keeper is telling me that they have to reallocate it not offset it??? Well you get the exact same outcome, correct? The recordkeeper wants to amend the adoption agreement to "allow for reallocation" isn't that what the offest does? It will be allocated the exact same way regardless of what you call it. I am way off here?

Thanks

CPC, ERPA

[K2retire]

You are not off -- the recordkeeper is.

[austin3515]

Ditto.

[ETA Consulting LLC]

You are not off -- the recordkeeper is.

Pushing the "Like" button.

We are one of very few industries where recordkeepers who are this far off on simple issues are allowed to remain in the business. The client should be made to understand the level of incompetence in suggesting they have to amend their plan to correct something that is not broken. Just wanted to vent a little.

Good Luck!

[BG5150]

The record keeper is telling me that they have to reallocate it not offset it??? Well you get the exact same outcome, correct? The recordkeeper wants to amend the adoption agreement to "allow for reallocation" isn't that what the offest does? It will be allocated the exact same way regardless of what you call it. I am way off here?

The Plan Document, as it is now, dictates what happens. I would never let the record keeper dictate to me (as Sponsor) or one of my clients what amendments must be made to a plan. To me, if a record keeper cannot administer the plan as written, especially with no off-the-wall provisions, they should no longer have our business. It's pretty much "take the damned money and do with it what we tell you unless it is a blatant violation of statute."

And are reallocate and offset really different? To the plan not really. To the employer, yes. Kinda. To me, it's semantics, really.

[Bird]

We are one of very few industries where recordkeepers who are this far off on simple issues are allowed to remain in the business.

The older I get the more negative my world view gets - I think incompetence knows no bounds of industry.

[david rigby]

... allowed to remain in the business...

"allowed?" That could be a scary thought.

This "problem" may be related to inexperience of one analyst, rather than incompetence of that analyst's employer. Chill out, perhaps?

The sponsor can probably solve this "problem" very easily, by submitting a letter stating they are making a contribution in the exact amount of the forfeiture account. If the analyst does not understand, then the sponsor calls the analyst's supervisor and gently identifies the training opportunity.

[movedon]

...This "problem" may be related to inexperience of one analyst, rather than incompetence of that analyst's employer. Chill out, perhaps?

The sponsor can probably solve this "problem" very easily, by submitting a letter stating they are making a contribution in the exact amount of the forfeiture account. If the analyst does not understand, then the sponsor calls the analyst's supervisor and gently identifies the training opportunity.

If only I were well-adjusted and optimistic enough to be so charitable... I've dealt with enough fund family and brokerage 800 number types and "plan specialists" (and their managers, and their managers' managers) over the years to know that this kind of incompetence is systemic and extremely frustrating. And I don't want to write a letter and talk to three different people every time I want to do something as simple as handle a forfeiture in accordance with the plan document. I feel like these people are taught to stick to their guns no matter what and never consider the possibility that the person on the other end of the phone knows what they're talking about. Maybe it's a securities regulations issue sometimes, but I feel like there is a real problem with idiots failing to do what I tell them to do and thinking for themselves (and being wrong) way too much. Grr.