cdavis25 Posted June 27, 2013 Posted June 27, 2013 Can a Plan use 2013 forfeitures to reduce a 2012 employer contribution that is depsoited in 2013? I would think not, but the vendor says that is what they would do if the client request X amount from the forfeitures to be used and the forfeiture balance dropped below that x value due to market conditions. The document says forfeitures are used to reduce fees or contributions.
12AX7 Posted June 27, 2013 Posted June 27, 2013 Normally, no. You have to follow the terms of the plan document. Some plan documents allow for a one plan year delay in the application of the forfeiture. For example, a forfeiture in 2013 would get applied for the 2014 plan year.
ESOP Guy Posted June 27, 2013 Posted June 27, 2013 I find it odd the forfitures are being held in an account that can lose money.
BG5150 Posted June 27, 2013 Posted June 27, 2013 I find it odd the forfitures are being held in an account that can lose money. ING does this. It doesn't lose much, but can and does sometimes. I thought it was odd, too. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
12AX7 Posted June 27, 2013 Posted June 27, 2013 If forfeitures are held in a money market account, they can lose value.
ESOP Guy Posted June 27, 2013 Posted June 27, 2013 If forfeitures are held in a money market account, they can lose value. Is it the rates are so low they don't cover a fee? (Sorry if a dumb question but it has been several years since I had anything to do with a daily 401(k) plan)
12AX7 Posted June 27, 2013 Posted June 27, 2013 Is it the rates are so low they don't cover a fee? (Sorry if a dumb question but it has been several years since I had anything to do with a daily 401(k) plan) Exactly, but in some instances there's no other choice.
cdavis25 Posted June 28, 2013 Author Posted June 28, 2013 I agree that the answer is no, but thought maybe I was missing something. I never heard of someone using a 2013 forfeiture to reduce a 2012 contribution.
BG5150 Posted June 28, 2013 Posted June 28, 2013 Usually the document preparation has questions of disposition of the forfeitures in the SAME year or the year AFTER. I've never seen a year BEFORE option. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
K2retire Posted July 2, 2013 Posted July 2, 2013 As a practical matter, most plan sponsors don't understand the question. If they are posting a 2012 contribution and see a forfeiture balance available, they are not likely to ask if it was a 2012 or 2013 forfeiture before they use it.
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