Lori H Posted November 4, 2013 Posted November 4, 2013 The profit sharing plan I'm working on has forfeitures. The plan document states that forfeitures are to be used in the year following to reduce the employer contribution. If the sponsor is not making a contribution what should be done with the forfeitures. Should they be reallocated using the contribution formula? The plan is top-heavy and the contribution formula is non-integrated. Thanks for the help.
Lou S. Posted November 4, 2013 Posted November 4, 2013 Does the plan document allow for forfeitures to pay expenses? If so that might be an option to avoid the small balance problem if you reallocate small forfeiture account. Otherwise pretty much yeah, you make a contribution equal to the forfeitures to realloacte and reduce the employer contribution by the reallocated forfeitures. Net effect, no contribution check by the employer but allocate the forfeitures to participants under terms of the document.
Lori H Posted November 4, 2013 Author Posted November 4, 2013 The document does allow for forfeitures to be used to pay the expenses. The amount of the forfeitures is approx. $17k and will exceed the expenses. Thank you for the help.
BG5150 Posted November 5, 2013 Posted November 5, 2013 The document does allow for forfeitures to be used to pay the expenses. The amount of the forfeitures is approx. $17k and will exceed the expenses. Thank you for the help. Pad your bill! ESOP Guy 1 QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Guest lizannc Posted April 17, 2014 Posted April 17, 2014 What if this forfeiture is from the matching source and they are not making a match this year?
ESOP Guy Posted April 17, 2014 Posted April 17, 2014 Make a match equal to the size of the forfitures.
Guest lizannc Posted April 18, 2014 Posted April 18, 2014 Thank you so much - that's what we are doing.
MoShawn Posted April 18, 2014 Posted April 18, 2014 Does the document specify that match forfeitures must be used to reduce match, or just "employer contributions"?
ESOP Guy Posted April 18, 2014 Posted April 18, 2014 Thank you so much - that's what we are doing. I am sorry what is the question if my answer sort of comes across as being a smart alec answer -- which wasn't the intent? If you are making a match the same size as the forf and they reduce that means the employer puts in zero dollars and you get rid of the forf. I don't see a question any more.
Guest lizannc Posted April 21, 2014 Posted April 21, 2014 Yes, we are doing a match that equals the forfeiture. Thank you!
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