Lost earnings from Forfeiture account

[JKW]

A plan had a missed deferral opportunity - which they corrected with the 50%,etc. There is a lost earnings amount of approx. $50. Is it ok if they plan takes is from the forfeiture account? I think not but I am seeing conflicting info. Their document states forfeitures can be used to offset plan expenses and reduce employer contributions. Thoughts?

[austin3515]

I don't recall, but a) I think EPCRS will say and b) will it make any difference? I mean, are there other employer contributions that can be offset, thus making it a zero sum decision? So if the employer uses the $50 in forfeitures to reduce this correction or $50 to reduce the match, the employer still saves $50.

I generally try to avoid answers like this that don't answer the question posed, but I went and did it anyway...

[austin3515]

I felt bad, so I went looking for the answer:

Section 6.02(4)© in EPCRS

For some strange reason I cannot copy and paste...

I typed in this link, so you might have to copy and paste to your browser...

www.irs.gov/irb/2013-04_IRB/ar06.html

Short answer is that you can use forfeitures towards the correction if forfeitures can be used to offset employer contributions.

[BG5150]

I thought you couldn't use forfeitures to offset a QNEC.

[John Feldt ERPA CPC QPA]

Under 2013-12, I think they limited that restriction to just QNECs for ADP/ACP test corrections.

[JKW]

Thank you austin3515.

[masteff]

For some strange reason I cannot copy and paste...

http://benefitslink.com/boards/index.php?/topic/55213-cant-quote-or-paste-or-cant-edit-a-new-post-heres-how/