2 unrelated questions

[CJS07]

There is some discussion and disagreement among some of us as we have seen different firms use different approaches - wondering if anyone can settle these 2 questions:

1. If you are preparing a 2012 Valuation and a participant has a loan payment receivable (due in 2012 but doesn't get deposited at Fund company until January 2013). Do you show the payment receivable in your 2012 Valuation as a receivable and reduce the loan balance by that payment? OR Do you report the loan balance as of 2012 without the receivable payment?

2. It is 2013, you are working on a 2012 Valuation. You notice there is a participant that has incurred a 5 year break in service (as of 12/31/12) who needs to have a portion of their account forfeited. Do you show the forfeiture on your 2012 Valuation, have the Fund Co. forfeit the person in 2013, and then make adjustments to the forfeiture account for the gain/loss in 2013 OR do you leave the person as is on the 2012 Valuation, have the fund company forfeit the unvested portion in 2013 and show that forfeiture on the 2013 Valuation?

TIA

[Lou S.]

For 1, are you doing the valuation on a cash or accrual basis. That should answer your question.

For 2, how are forfeitures being used in the plan? If added to the contribution very likely show it as 2012 and reallocate it. If used to reduce contributions or pay admin fee very likely just show in 2013 when you process. Ideally you'd have a system in place to do it at the end of the plan year since presumably you knew they had a 4 year break the prior year but sometimes ideal doesn't happen.

[Bird]

For 1. we'd generally show loans on a cash basis.

For 2. it sounds like a 2012 forfeiture to be forfeited in 2012 and reallocated in 2012 or used to reduce that contribution.