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Nassau

Overpayment of Employer Match

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My client has received reclaimed match in the amount of $1,825.66 from a participant that received $2,022.67 as part of their termination distribution that was processed 05/03/2011. The amount received is less because it had been invested as a direct rollover to an IRA by the participant and was not worth the original investment of $2,022.67.

The error was client caused and they handled the reclaim process, but they now want to know how to now make the plan whole.

I know that the client will have to make up the difference owed but would the amount received be considered "adjusted for loss"? Do we have to do a separate calculation of the gain/loss of the original $2,022.67 paid out and if so what calculation options are available?

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Why restore it at all? Won't it just be considered a forfeiture?

Either it will be used to reduce employer contributions, pay plan expenses or be added to a discretionary contribution. In the first two cases you'd just be putting money in now to take out the same amount soon after, in the 3rd case just increase this years dicretionary contribution by the amount of the loss.

Am I missing something?

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Why restore it at all? Won't it just be considered a forfeiture?

Either it will be used to reduce employer contributions, pay plan expenses or be added to a discretionary contribution. In the first two cases you'd just be putting money in now to take out the same amount soon after, in the 3rd case just increase this years dicretionary contribution by the amount of the loss.

Am I missing something?

You are correct that it doesn't make sense -- but that is exactly what is required.

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You've already done part of the EPCRS overpayment correction. I think you will need a separate calculation of earnings for the plan. There are some exceptions to full correction that may be helpful when you try to calculate the income adjustment.

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