Match Correction

[Guest Mike Schwing]

I have a plan with a 12/31 plan year end; however, it operates on the fiscal year end of September 30.

The plan contains a discretionary matching contribution with an allocation rate of 100% on the first 4%.

For the 2001 plan year the employer had their CPA calculate the matching contribution. Appanently, they told the CPA to calulate the match based on the fiscal year compensation; however the plan document is written so that compensation is based on the plan year.

The CPA was getting ready to calculate the 2002 match and happened to call me. When I explained that the match is based on plan year compensation they told me that is not what they did for 2001.

I went back and reviewed the allocation and reran the numbers using plan year compensation. It is a small plan - 10 participants and it ended up that 2 ee's got a overmatched (but only by amunts of $13 & $50) while 4 ee's got undermatched by amounts ranging from $100 to $400 - This includes an HCE who was undermatched the most.

Would this be considered an operational error? Can I just fix this by having them make up the match owed and forfeiting the two overmatched? Does if make a difference if I correct before of after December 31, 2002?

[david rigby]

"Calculate" a 100% match for 10 participants? How hard can that be?

Fix it.