The IRS has provided formal guidance clarifying the timing of when plan forfeitures must be used in qualified retirement plans. The guidance requires defined contribution plans to use forfeiture monies placed in a plan suspense account no later than 12 months after the close of the plan year in which the forfeitures occurred.
Prior rules generally required plans to use forfeitures by the end of the plan year in which they occurred.
Given the additional time provided by the new guidance, we’ll no longer automatically reallocate funds in plan-level expense accounts to participant accounts on an annual basis.
Plan sponsors can still issue payments from the plan-expense account for plan expenses by submitting the Fee payment authorization form.
To reallocate funds to participant accounts, please send instruction to RKDirect@capitalgroup.com.
We appreciate the opportunity to serve your retirement plan needs. If you have any questions, please contact a retirement plan services representative at (800) 421-6019.