Accounting, Payroll & Pension Issues/How to handle 401K forfeitures

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Expert: - 5/9/2011


Question
I have a pension expense account, which i use to expense the employers match to the 401k contributions. I have forfeitures, so I only made a payment for the employees contributions the company did not pay anything because the credits from the forfeitures were used. So my questions is, do i just not have a pension expense this month? I just feel uncomfortable not reporting any expense for this period. How are these credits usually handle on the books?

Answer
The forfeiture account may be used for administrative purposes. I run a report from my 401K plan website (you could also call your 401K provider) and get the amount of forfeiture each month. I post the forfeiture to my 401K expense account My 401K expense account is a credit account so I post the forfeiture as a debit amount.

Shirley

Accounting, Payroll & Pension Issues

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Shirley McAllister, CPP, PHR

Expertise

I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension. I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures. Please do not ask me homework questions I do not have time to answer them.

Experience

25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.

Organizations
SHRM, APA, I.O.M.A.

Publications
I.O.M.A. and BNA

Education/Credentials
P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration. Boise State University Human Resource Certification

Awards and Honors
APA Hotline Citation of Merit for last 8 years.

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