Topic Archive: Forfeitures

What is a Suspense Account and Can We Use Our Forfeiture Account Instead?

DWC | 12/3/19

Facts

The annual compliance report that our TPA provided to us indicates that we over-funded matching contributions for certain employees and instructs us to transfer the excess amounts out of the affected participants’ accounts and into a plan suspense account.  The only problem is that I am not sure what a suspense account is.  When I spoke to our recordkeeper, they said we have a forfeiture account but not a suspense account.

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Is It Possible to Split Eligibility to Allow for Deferrals but to Postpone Safe Harbor Contributions?

DWC | 10/29/19

Facts

We allow new employees to join our 401(k) plan on the first of the month after they are hired.  They become eligible to make deferrals and also receive the company safe harbor contribution at that time.  We don’t have high turnover, but employees who leave often do so within the first year of joining us.  We don’t mind allowing new hires to contribute to the plan out of their own paychecks, but since safe harbor contributions must be immediately vested, it feels like we are wasting company money by giving a contribution to someone who might leave in a relatively short timeframe.

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Forfeiture Account Gathering Dust? We’ve got a fix for that!

DWC | 02/28/19

With all the responsibilities that come with being a plan sponsor, not to mention a business owner, your plan’s forfeiture account probably doesn’t make it anywhere near the top of the priority list.  More than likely, forfeitures are allocated to the account automatically by your plan’s recordkeeper following a participant distribution.  Then, your plan consultant provides you an annual update of the value of the account when delivering your compliance testing, plan reconciliations, and Form 5500 after year-end.  The forfeiture account is just sitting pretty with minimal earnings, readily available for a rainy day.  No problem, right?

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Can Higher Than Normal Turnover Affect my 401(k) Plan? | Part 3 of 3: The Results

DWC | 02/19/19

Facts

In last week’s QOTW, you provided some tools we could use to identify which participants were affected by our decision to close one of our locations, and to calculate our actual turnover rate for purposes of  determining whether a partial plan termination has occurred.

We’ve performed the review, and our minimum turnover rate will exceed 20%. Depending on which employees accept our relocation offer, we may have even more folks who terminate during this time frame.

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Which 401(k) Plan Fees Can Be Paid Out of Plan Assets?

DWC | 03/20/18

Facts

When we first established our 401(k) plan, the company didn’t have a lot of discretionary income, so we went with a low-cost provider and set it up so the plan would pay for its own fees. We have since been told that paying fees out of the plan isn’t that straightforward.

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What Are 401(k) Plan Forfeitures and How Can They Be Used?

DWC | 10/17/17

Facts

We have a 401(k) plan that includes several different types of contributions—employee deferrals, a company-provided safe harbor match, and a profit sharing contribution. The plan has a 6-year graded vesting schedule.

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