In this episode, Eric discussed:

• The metaphorical IRS vs. ERISA Tug-of-War on Forfeitures
• ERISA Fiduciary Duties and the Plan Document
• Forfeiture Lawsuits and Plan Document Compliance 
• Reviewing and Updating the Plan Document for Forfeitures

Key Takeaways:

• There is a proverbial "tug of war" between IRS regulations for qualified plans and ERISA fiduciary principles when it comes to the use of forfeiture funds. IRS allows 3 options, while ERISA views forfeiture funds as plan assets that must be used in the best interest of participants.
• ERISA fiduciaries have key duties, including following the plan document, which is crucial when determining how to properly use forfeiture funds.
• Many ERISA forfeiture lawsuits have been dismissed due to the plan document allowing the use of forfeitures for plan expenses or offsetting employer contributions, rather than returning them to participants.
• Plan committees and advisors should review their plan documents to ensure compliance with how forfeiture funds are being utilized, and consider updating the document if the intent is to never return forfeitures to participants.

“If you never, ever intend to return that money to plan participants, go ahead and change the document to say that you can either pay plan expenses or use forfeitures to offset the employer match and don't leave it in the document provision to return it to the participants.” - Eric Dyson

Connect with Eric Dyson: 

Website: https://90northllc.com/

Phone: 940-248-4800

Email: [email protected] 

LinkedIn: https://www.linkedin.com/in/401kguy/ 

The information and content of this podcast is general in nature and is provided solely for educational and informational purposes. It is believed to be accurate and reliable as of the posting date but may be subject to change

It is not intended to provide a specific recommendation for any type of product or service discussed in this presentation or to provide any warranties, investment advice, financial advice, tax, plan design or legal advice (unless otherwise specifically indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.

The specific facts and circumstances of all qualified plans can vary and the information contained in this podcast may or may not apply to your individual circumstances or to your plan or client plan-specific circumstances.