If you have a sole proprietor with employees, you have to solve for his net compensation after SocSec/FICA and plan contributions. If you have a SoleProp plan with forfeitures reducing contribution, how do you determine SoleProp's net comp and the total DC plan contribution?

It seems that the comp should be based on the SoleProp's actual deduction rather than the total allocation, but any system or spreadsheet I have seen determines comp based on total allocation.

This is a chicken and egg issue. Which comes first? In the end, it is an allocation of the forfeitures that counts. Your spreadsheet is effectively allocating the forfeitures to the non-owners. I think that is perfectly reasonable, especially in a top-heavy plan where there is a 401(k) to which the owner deferred. In that case, the first 3% would go to the non-keys anyway.

But if you want to allocate the forfeitures in some manner other than "first to non-owners", I don't see anything wrong with it. Might have a bit of trouble finding software that matches your enthusiasm, though.