Misapplication of SH Allocation Formula

[Guest kgsingletary]

I have a Safe Harbor plan document that states the employer will use the 3% Nonelective Contribution. However, the employer (part of a PEO) made a 100% up to 15% Match Contribution (which is the old allocation - prior to SH).

Apparently there was a lack of communication and the payroll department did not stop the match contribution when the SH amendment was signed changing the allocation.

I'm looking for confirmation or further suggestion on how to correct this defect/administrative oversight...

In the ERISA Outline Book - Pg 15.541 - I've found that under "Misapplication of allocation formula" that I would in so many words - forfeit the Match contribution and reallocate as per the plan document as a 3% Nonelective Contribution.

Any suggestions or further comments are appreciated.

Also, this plan is failing 404 & 415 and is Top Heavy. Therefore, if I can correct the "Misapplication of allocation formula", then 404 and 415 will pass and the Top Heavy minimum is taken care of - this was the employer's intention.