Excluding otherwise excludable employees

[Guest JLecas]

I need to reallocate forfeitures in a plan with a group based allocation. The plan entry requirements are age 21, 6 months of service, monthly entry. My idea is to allocate forfeitures to those participants with 1000 hours and who are employed on the last day, but I do not want to give an allocation to the otherwise excludable employees (all are NHCEs). This is possible 1) because it is a group based allocation where each employee is in their own rate group and 2) though I am giving nothing to the otherwise excludable employees, they are tested seperately from those participants who are not excludable. Am I correct?

[rcline46]

You must follow the document rules for allocation of forfeitures. I doubt you can avoid allocating to the OEE. However, if a plan with each participant in their own group, you might accomplish this, but you still have to pass both 410(b) and 401(a)(4) while following the document rules.

[Guest JLecas]

Forfeitures are allocated the same as profit sharing. If I test the otherwise excludable employees seperately, both testing of the otherwise excludables and the non-excludables pass.