Are forfeitures released and are earnings calculated when matching con

[John A]

What is the proper procedure for handling forfeitures when match contribution has not yet been deposited? An employer has decided to make a discretionary matching contribution, and the match formula is defined in the plan document. The employer is planning on depositing the matching contribution after March 15. The ADP test fails and will be corrected before April 15 through corrective distributions of deferrals. The matching contributions associated with the excess contributions (deferrals returned due to the ADP test failure) will be treated as forfeitures and the plan document provides for reallocating them to other plan participants. The employer will make the corrective distributions of excess contributions before March 15, but the match will not be deposited until later. Questions: 1) Can we safely assume that no earnings will be calculated on the match treated as forfeiture? 2) Can the employer release forfeiture amounts attributable to the discretionary match from current match account balances, even though the match involved in the calculation has not yet been deposited?

[Guest]

John, you may want to post your question in one of the other message boards on benefitslink. Many of those message boards concentrate on the technical side of handling transactions, such as forfeitures, whereas this message board is more concerned with handling daily transaction processing.

Thanks.