FAQ 647: Allocations--Allocating forfeitures on an integrated basis when there is no PS contribution to allocate


We have a case where forfeiture are added to source contribution and the source contribution is allocated on an integregated basis. Active participants and terminated participated with >500 hours of service are eligible for an allocation. We have 2 issues. First, we have a terminated participant with >1000 hours (status code M). We have entered group codes 3,4,6, & 7 as eligible for forfeitures in our source. Our terminated participant is not receiving a forfeiture allocation. Secondly, there is no 2007 profit sharing contribution, but there are profit sharing forfeitures. The forfeitures are not being allocated on an integrated basis. What do we need to do to get ASC to allocate on the correct basis and to the correct participants?


The $1,033 in forfeitures is not enough to cover the top-heavy minimum of 3% to the actives. Because the profit sharing source is coded to offset the top-heavy minimum, it is allocating first to cover top-heavy before doing the integration. If you code the plan as not top-heavy, it allocates both on an integrated basis and to the terminated employee.