What Are Forfeitures?

Employer contributions subject to vesting can be forfeited when participants terminate before vesting. These amounts must be used per the plan document timeline and options.

Permitted Uses (Examples)

Reduce employer contributions for the year

Pay allowable plan administrative expenses

Allocate to eligible participants if the plan allows

Compliance Pointers

Maintain a forfeiture account log, follow timing rules, and avoid accumulation beyond allowed periods. Improper handling may create qualification or operational defects.

Plan Sponsor Action Checklist

References

• IRS operational compliance concepts for forfeitures; confirm in plan document.