FAQ 339: ESOP--Reallocated forfeitures don't equal forfeited amounts


I can't get reallocated and forfeited amounts in an ESOP to equal. Their total forfeitures are 7,341.5897. When I run calculations and run both forfeitures and forfeited amounts, I'm getting 7,341.5897 forfeited out and 7,341.5911 going back in. The contribution and forfeiture eligibility parameters are the same, 1000 hours and eligible (ABCM). What did I do wrong?


Although the contribution and forfeiture allocation methods in the specs are the same, and the groups eligible and hours requirements are the same, the Forfeiture Fund Split field is set differently than the Contribution Fund Split field. With the Forfeiture Fund Split field set to "0-Elections", the system will first total up the forfeited amounts across all funds, then it will reallocate the total based on the participants' elections (or directly to fund #1 if no elections exist). When that field is set that way, the system has to take the number of shares forfeited times the Forfeiture Price per Share in the specs to get the total, then it does the reallocation in dollars and then has to convert the dollar amounts back to shares, so rounding issues come into play. If you set the Forfeiture Fund Split field to "50-Source Fund", save the specs, and re-run calculations, you should see the same amount forfeiting and being reallocated as the amounts should stay in shares while being reallocated.