I have a situation where a small employer has contributed the close to the maximum 15% deductibility limit to their Profit Sharing Plan. On top of this, there is a fairly large forfeiture account that is to be re-allocated. As long as the 415 limit is not exceeded for individual participants, I can't see where this is a problem since the 15% is a deductibility limit and, of course, re-allocated forfeitures are not deductible. The plan states that forfeitures shall be "added to the employer contribution."

Any input would be appreciated.

You are correct, forfeitures are not included in the deductibility limits. It's the same thing with a PS plan that uses forfs. to reduce - you can gross up the contribution, so that the net deposit is 15% and still pass 404(a).

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Andy Treece