Discretionary Match Forfeitures

[Cobras59]

When are match forfeitures allocated as an "increase to discretionary match" and for what reason?

Is there a specific regulation relating to it?  Couldn't find in ERISA outline book.

 

[ESOP Guy]

If I understand your question correctly your answer can only be found in the document.

The people setting up the plan can choose if they want match forfeitures to be reallocated or used to pay for current match (or expenses).  There is no required when it is always a choice of the people setting up the plan. 

[rcline46]

What, you want to keep the forfeitures in suspense?  No way, the IRS says you must allocate or spend them at the end of each plan year.

 

[ESOP Guy]

To be clear the choice has to be written into the plan document which is why I said you have to look to the document to find out how any given plan works in this regard.

And yes the plan will tell you when to do it also.  But it does need to be annually. 

[Cobras59]

Quote

The document does say comp to comp.  However, someone told me that discretionary forfeitures had to be allocated as an increase to the match contribution and included in the ACP test.   Doesn't sound like that is a set regulation and should be followed by the plan document.