Handling year end "true-up"
Posted 29 April 2003 - 01:37 PM
1. says we should look at ALL the payrolls for the year, figure out when the match may have been "underpaid" (because a participant had maxed out their deferrals or had significantly changed their deferral percentage) and calculate earnings and interest from this time through the end of the year.
2nd vendor feels we should only calculate the "true-up" and credit interest from 1/1 of this year until the time we pay this true-up back into the participant's account.
What has been others experience? Also, what is the proper form (and timing) for reporting these?
Posted 29 April 2003 - 02:07 PM
True-ups are not mandatory; certainly the timing to do a year-end true-up is not possible until after the year is over. I see no need to do any interest calculation at this time.
Posted 29 April 2003 - 03:11 PM
Whether or not true-ups are mandatory depends on the terms of the plan.
Posted 29 April 2003 - 03:17 PM
Posted 29 April 2003 - 03:18 PM
Posted 29 April 2003 - 03:23 PM
Posted 29 April 2003 - 03:31 PM
Because of some large swings in deferral percentages in '02, this is the first year they have run into this problem.
So is everyone saying they owe ONLY the true-up match amount and nothing from an earnings or interest standpoint?
Thanks for all the feedback!
Posted 29 April 2003 - 03:41 PM
As a side note, we try to keep our clients and documents in-sync. In other words, if they want to make match contributions each payroll, then write the document to reflect this so you don't have to calculate true ups each year.
Posted 29 April 2003 - 06:56 PM
Posted 30 April 2003 - 02:00 PM