Forfeitures - Plan with Related Employers

[52626]

Plan has three related employers ( controlled group).

Forfeitures are held in one forfeiture account - Question - is there any issue with allowing the related employer to only use forfeitures triggered by former employees within their group. For example there is $100,000 in the forfeiture account - $40,000 from Company A, $10,000 from Company B and $50,000 from Company C.

The Plan Sponsor would like each entity to use only the forfeitures triggered by their respective former participants.  Plan document does not address is provision

[Peter Gulia]

Consider amending the documents governing the plan so they provide what the plan sponsor wants.

Before writing an amendment, evaluate whether an otherwise desired provision might result in a tax-disqualifying discrimination in favor of highly-compensated employees.

This is not advice to anyone.

[BG5150]

Side note:  Is this a really big plan?  $100k in forfs seems like a lot.  Disclosure:  I deal with mostly small(er) plans.

[Paul I]

Keep in mind that the forfeiture account is supposed to be cleared out every year.  If the plan has been accumulating forfeitures in a consolidated forfeiture account over multiple years, there could be an operational issue if the Plan Sponsor is thinking of splitting up and applying these aged amounts by employer.

[Bri]

....and don't be cutting back any allocations of the forfeitures where you might come to realize language was always on the books!

[David D]

Might also want to see what the Adoption Agreement says. Many Adoption Agreements have an option that addresses that by the pre approved providers.