ACP test correction

[SViola]

If the ACP test fails and the match has not yet been deposited since it is calculated on an annual basis, do gains need to be included in the amount that is refunded?

[#toomanyrules]

Is the match discretionary? If so, unless your plan document has provisions that prevent you from doing so, you can cap the match for HCEs at the limit where ACP passes. Thus, no failed test and no refunds.

[Luke Bailey]

On 1/14/2021 at 1:09 PM, SViola said:

If the ACP test fails and the match has not yet been deposited since it is calculated on an annual basis, do gains need to be included in the amount that is refunded?

What gains would there be if the money was not yet deposited?

[C. B. Zeller]

32 minutes ago, Luke Bailey said:

What gains would there be if the money was not yet deposited?

A plan might be required by its document to use a particular method, such as the method under 1.401(m)-2(b)(2)(iv)(C), for calculating allocable income. In that case you may have allocable income regardless of the timing of the deposits.

If the plan document allows allocable income to be determined in any reasonable manner, then I agree that it could be disregarded in the case of deposits not yet made.