Employer is contemplating converting its existing 401(k) plan in order to satisfy the safe harbor requirements. It wants to utilize the safe harbor matching rules but it doesn't want to fully vest the prior employer match. Rather, it would like to retain its prior vesting schedule with respect to prior matching contributions and use those forfeitures to offset its future safe harbor matching obligation. Anyone see any problems with this?

In order to preserve the top-heavy "pass", I have amended plans to have forfeitures from prior matching contributions and prior profit sharing contributions go first toward administrative expenses and then to offset the safe harbor match. The amendment was approved by the IRS in a determination letter filing. You just want to make sure of your timing so that the amendment comes before anyone meets the criteria for an allocaiton of forfeitures under your old language.