Forfeitures as the ending balance for a form 5500

[Jen Wallace]

If a terminating plan has only a forfeiture balance as of the end of the plan year and no active participants, how would you record the participant count?  Ordinarily I would not count the forfeiture account as a participant but am wondering if a participant count of zero would raise a red flag.

[Lou S.]

The forfeiture account is not a participant.

Why does the plan still have forfeitures in it if everyone was paid out? Forfeitures should have been reallocated to participants or used to pay fees according to the terms of the document.

edit - if the forfeitures are being used to pay admin fees can you show them as a payable at EOY and show a zero balance final return?

 

[Madison71]

What are you doing with the forfeiture balance?  If reallocated to participants than it should have already been done, but I guess you could count those as former entitled to future.  If for reasonable admin. expenses, then typically try to apply by year end if participants are paid out to avoid this issue.  

With that said, the instructions say do not mark final return/report if you are reporting participants and/or assets at the end of the year, so you should be ok reporting 0. 

[CJ Allen]

 I would agree that 0 participants should be OK if forfeitures are used to defray remaining expenses of the plan.  However, if the forfeitures are an accrued benefit to participants, I'd be hesitant to indicate 0.  It would seem more appropriate to determine the number of participants requiring allocation of forfeitures under whatever method is to be applied for allocation purposes.