Partner R. Randall Tracht spoke to PLANADVISER about proposed rules from the US Internal Revenue Service (IRS) to formalize the timing and use of forfeitures in qualified retirement plans by plan sponsors. Randall said the rule is unlikely to change how plan advisers and administrators operate but would make those processes clearer.
“The IRS has long been of the view that the Internal Revenue Code’s tax-qualification rules and requirements generally do not permit defined contribution plans to carry over unused and unallocated forfeitures from year to year,” Randall said.
“The IRS regularly expressed this position in the course of retirement plan audits, but, until now, the IRS had not issued formal regulations setting forth their position.”