Recently had a client going through an Internal Revenue Service (IRS) audit and while talking to an agent, they didn’t disagree with my theory that the idea of being able to reduce employer contributions through forfeitures is something that will no longer be an option, isn’t farfetched.
Before EGTRRA restatements, I remember that paying plan expenses wasn’t an option in what to do with forfeitures. Now if a plan sponsor can pay off administrative expenses through forfeitures, but decides to save a couple of bucks on their employer contributions, how is that going to be allowed to continue to be permissible? I think it’s a matter of time before the government says no.
