It depends. The Program is prepared to calculate your contributions based on the plan’s design, eligible employees and compensation. This will allow you to maximize all available contributions while still adhering to the contribution limits. Respond to the compliance team’s solicitation email in January to have all applicable testing performed as well as contributions calculated.

There are three ways to submit contributions:

  1. With a check payable to ABA Retirement Funds Program (or a wire) along with a Contribution and Loan Repayment Remittance Form.
  2. Via Payroll/Administration through Sponsor Web.
  3. Via ProgramPay, a new payroll submission procedure, also through Sponsor Web.

Based on the method you elected in your adoption agreement, you will either use the funds in the forfeiture account to offset your employer contribution costs (most common) or reallocate the funds on an annual basis to the eligible participants. The Program can assist you in calculating a reallocation if that’s the method chosen.

The Program can monitor the dollar limit for contributions (401(k) deferral limit as well as 415 annual additions limit). We can only monitor the percentage limit if we are also calculating your employer contributions for the year.  If a participant does exceed one of the contribution limits, please submit a Corrective Measures for Contributions form.  Use section 3A for excess contributions over the annual additions limit, or section 3B if the 401(k) deferral limit was exceeded.


Forfeitures result from the unvested portion of a participant’s account balance upon his or her termination of employment. A participant is always 100% vested in the portion of his or her account attributable to 401(k) pre-tax elective contributions (including any catch-up contributions), as well as any after-tax employee contributions, Roth 401(k) contributions and qualified non-elective or qualified matching contributions. Also, any contributions made to satisfy 401(k) safe harbor requirements (except those made under a Qualified Automatic Contribution Arrangement) are 100% vested at all times.

However, the portion of a participant’s account attributable to employer contributions may not be fully vested and upon the participant’s separation from service; therefore, any unvested portion will be transferred to the firm’s forfeiture reserve account when the participant requests a complete distribution, or if the firm requests a cash-out of small accounts. Please indicate on the distribution form (discussed in “Distributions” under Accessing Funds) the participant’s applicable vested percentage.

Other situations that cause forfeitures to occur:

1. If the participant’s vested account balance is greater than $5,000, the participant may continue to maintain an account balance in the plan. In this case, the unvested portion shall be directed by you to the forfeiture reserve account upon the earlier of:

  • The participant’s request for a complete distribution, or
  • The fifth anniversary of the participant’s separation from service.

2. If there are no vested assets in the participant’s account upon separation from service, you may direct the Program in writing to forfeit the account balance. If the Program receives no direction from you, it will transfer the unvested portion to the forfeiture account two years after the year in which the participant terminates employment (See “Distributions” under Accessing Funds) if the participant’s vested balance is $5,000 or less.

After the close of each plan year, you may want to instruct the Program on the reallocation of the assets in the forfeiture reserve account, if any. If your plan is a money purchase pension plan or target benefit plan, your only option is to use the assets in the forfeiture reserve account to reduce the amount of your following plan year contribution to the plan. As a result, before sending your contribution to the Program, please obtain the forfeiture reserve account balance from our Customer Service Associates as of the last day of the prior plan year. Then indicate on page 4 (Deposit Summary) of the Contribution and Loan Repayment Remittance Form the amount to be applied from the forfeiture account and send a check for the difference.

If your plan is a profit sharing plan (with or without a 401(k) feature), you should check your adoption agreement for the method you elected to treat assets in the forfeiture reserve account. You may have elected the “use to reduce employer contributions” method, as discussed in the preceding paragraph, or you may have elected the “reallocation among participants” method. To reallocate the assets in the forfeiture account, obtain the balance in the account as of the last day of the plan year, and indicate on Form 2 the amount to be allocated to each participant in the plan who was eligible to receive a contribution for that plan year. Please be aware that the amounts allocated to participants are counted toward each participant’s annual additions limit (see Contribution Limits) for the plan year for which the allocation is being made. The Program is prepared to assist you if you need help calculating the amount of forfeiture allocation for each participant. Just send a request in writing with each participant’s name, Social Security number and gross salary for the year. For more information on forfeitures, see the Webinar entitled “Understanding Forfeitures“.