Topic Archive: Vesting

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.

Read More

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.

Read More

Can Higher Than Normal Turnover Affect my 401(k) Plan? | Part 2 of 3: Doing the Math

DWC | 02/12/19

Facts

Last week, we asked whether the turnover we are expecting as a result of closing a facility would have any impact on our 401(k) plan, and you mentioned a partial plan termination.  We have some follow-up questions.  As a quick recap, we are in the process of closing one of our manufacturing facilities.  Some of those working at that location have turned down our relocation offer and will lose their jobs as a result.  From last week’s QOTW, I know there is potential for a partial plan termination and that I will need to perform a review to make a final determination.

Read More

Can Higher Than Normal Turnover Affect my 401(k) Plan? | Part 1 of 3: Overview

DWC | 02/5/19

Facts

Our company designs and manufactures boats.  Due to some advancements in technology, we will be closing one of our older facilities.  While we offered those workers the option to relocate to one of our other facilities, many have elected not to do so and will be terminating employment.  That group comprises roughly 20% of our total workforce.

Read More

Can We Change our Plan's Vesting Schedule?

DWC | 01/8/19

Facts

We set up our company 401(k) plan soon after we started the business.  At the time, being able to afford to make a match or profit sharing contribution seemed so distant as to not be worth thinking about.  We were so focused on the only contributions being employee deferrals that we set the vesting schedule at 100% across the board.

The company is now doing really well, and we want to reward our employees by making a generous profit sharing contribution.  The trick is that we would like to apply a lengthy vesting schedule to it as an incentive for our employees to stick around.

Read More

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.

Read More
The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.