Read ASPPA’s announcement at http://asppa-net.org/News/Article/ArticleID/7159.
Review the proposed regulation at https://www.gpo.gov/fdsys/pkg/FR-2017-01-18/html/2017-00876.htm.
Since the IRS issued regulations prohibiting the use of forfeiture accounts to fund safe harbor contributions, about five years ago, many practitioners have been stating to the IRS that they / we believed their 2011 regulation went far beyond what the underlying law stated. Getting this changed and corrected has taken longer than any of us would have liked, but now we are getting to a good outcome. The new regulation aligns with the underlying law.
As of now, we can begin recommending the use of forfeiture balances to satisfy the required safe harbor 401(k) contributions for employers who are interested in this approach. If you have questions, please contact JULY at 888.333.5859.