True-up Match . . . for 2001!

[Guest LKHartnett]

We have a client who uses their professional association's retirement plan administration package. We do compliance testing, calculate their profit sharing contribution, and review the 5500, as drafted by the association.

For purposes of calculating the PS contribution and compliance testing, we request basic payroll information after the end of the year, and we make some assumptions . . . we assume that the match is being made on a payroll by payroll basis, and it is being calculated properly . . . rather than asking them to send us the annual match information, we calculate it ourselves, run ACP, let them know they've passed, and ask them to confirm these numbers.

Unfortunately, the client has a new person working on the 401(k), and she was not properly trained on how to calculate the match. What's more, it didn't dawn on her to double check her final match numbers with our reports.

The association just sent the client the draft of the 5500 last week. I reviewed the Schedule I, and thought, "where the heck did these numbers come from?"

After much back and forth on the phone with the new person, we have essentially uncovered the fact that the match was not properly calculated, and for most participants we fall short.

This late in the game, what are our concerns in truing up the match? Are the participants entitled to any applicable gains (if there are any)? Is there any penalty because the deposits will be made after September 15? Can these amounts still be included in our 2001 ACP test if they are made this late in 2002?

Oh, so many questions . . .