Forfeitures for Plan Expenses

[austin3515]

Corbel 401k prototype document.

"Plan Expenses. May Forfeitures first be used to pay any administrative expenses?"

If the answer is yes, must forfeitures be used to first pay recordkeeping expenses, asssuming the expenses are paid by selling shares (i.e., not revenue sharing, not paid by the plan sponosr)?

[12AX7]

Mr. Powers, we have a similar provision in our Plan and I posed the same question to the author of the document because if narrowly interpreted, it appears that expenses must be paid before any other use of the forfeiture account. I didn't check, but perhaps the language came from the LRMs.

The reply I received was that expenses could first be paid from forfeiture, but it was up to the Plan Sponsor. The provision was not intended to remove discretion to either pay expenses directly from the plan or by the Plan Sponsor.

I would check with Corbel to determine if they have the same interpretation.

[austin3515]

They had the same interpretation (I submitted to Corbel and here at the same time). I too though was left longing for that sentence in the Basic Plan Document that made this clear-cut. Their interpretation seemed to be focusesd on the fact that forfeitures could/should be used towards unpaid expenses. Because the recordkeeping was paid when charged/incurred, you did not have to use forfeitures first.

[K2retire]

The use of the word "may" rather than "must" strongly implies that it is optional.

[austin3515]

I think it does more than imply that it is optional, I think it is the definition of optional. Thank you thank you thank you.