Leaderboard

There really isn't another reasonable option. Each late deferral is entitled to the lost earnings associated with that deferral. No. It is pretty clear that you can't give the lost earnings owed to one participant to another participant, simply because it is more convenient. Doing so would not make the participant who suffered the loss whole, which I would interpret as an incomplete correction. You could try, but I have seen more reasonable "short cuts" shot down in VFCP applications in the past. What I have done on VFCP apps with 100s of participants in the past is to calculate the lost earnings for each payroll as a whole, and then attaching a spreadsheet allocating the earnings for each late payroll date proportionate to each participants part of the total late deferral for the payroll date. It cuts the actual lost earnings calculations down to the number of problem payrolls rather than for each participant, and the spread sheet is pretty simple to set up. The bigger problem is what do you do with the participants who have left, and now have a balance of less than $1. If possible, I would ask the plan sponsor to eat the distribution cost and send the participants what they are owed. Of course, that may create another issue with lost or recalcitrant participants, but I think that is a separate discussion.