forfeiture

Subscribe to forfeiture

A recent rash of class action lawsuits in California claim that using forfeitures to reduce future employer contributions to tax-qualified retirement plans runs afoul of the Employee Retirement Income Security Act (ERISA). These cases have continued to advance despite their central claim seeming to contradict long-standing Internal Revenue Service (IRS) guidance for the permitted use…

The IRS recently finalized regulations that allow 401(k) plans to use forfeiture money to fund qualified non-elective contributions (“QNECs”) and qualified matching contributions (“QMACs”).  These regulations finalize proposed regulations issued last year (you can read our prior coverage of the proposed regulations here).

By way of background, QNECs and QNECs are types of employer…