When calculating earned income, it is necessary to allocate forfeitures between the employees and the owners. How is this done? Pro-rata based on the contributions allocated to employees? Profit Sharing only, or would you include all employer contributions (i.e., including safe harbor)?

Is there any published guidance on this?

Just a thought. Maybe I'm missing the boat, but aren't forfeitures a reallocation of previous deducted contributions therefore they would be applied after the calculation of Earned Income? Then wound't the allocation of the forefeitures be done according to the plan document: "in the same manner as the employer contributions", "to reduce the employer contribution" or "prorata" ?

If there is a requirement to include forfeitures in the calculation of the earned income, then I'm in over my head here!

I agree that the allocation of forfeitures shouldn't affect earned income. I'd say "to reduce" or "in the same manner" will be a more challenging calculation than "pro rata" because of the interdependency of the calcs.