Certain types of matching contributions made by employers to their workers' 401(k) plan accounts would be permissible under proposed rules issued by the IRS.

The Internal Revenue Service is seeking in proposed regulations to amend the definitions of qualified matching contributions (QMACs) and qualified nonelective contributions (QNECs). Under the proposal, issued Jan. 17, employer contributions to a plan could qualify as QMACs or QNECs if they satisfy applicable nonforfeitability and distribution requirements at the time they are allocated to participants' accounts.

The rules clarify that plan sponsors may use for matching contributions to current participants money held in accounts that were forfeited by former plan participants. These matching contributions would be nonforfeitable when made, the IRS said in the proposal.

"Many plan sponsors have been frustrated that they haven't been able to use the money in these forfeiture accounts to fully defray the plan's operating costs," Craig Hoffman, general counsel for the American Retirement Association, told Bloomberg BNA. The Washington-based ARA advocates on behalf of retirement and benefit plan professionals.