What: Timeframe in which forfeiture funds from DC plans must be used has been extended
Action Required: If DC forfeiture funds exist, utilize them by 12/31 of following year in which they occur
Key Dates:
Impacted Audiences: Employers with a defined contribution plan (including the DC portion of Hybrid)
For More Information: See Below
Key Information:
The timeframe you in which you must use forfeiture funds from your defined contribution plan has been extended.
As a reminder, in years prior, the MERS Plan Document required employers to utilize DC forfeiture funds in the plan year in which they occurred. Effective January 1, 2024, the IRS will allow forfeitures to be used in the following plan year they occur, effectively allowing an additional year to utilize such funds. For example, if forfeiture funds are incurred in June of 2024, they would need to be utilized by December 31, 2025. The MERS Retirement Board revised the Plan Document to align with this new standard.