Match Forfeit

[Guest Mike Schwing]

As a TPA we've always taken the approach that if an HCE is required to get a refund due to an ADP failure, that if there is any match associated to the ADP refund we forfeit this match. I know there is an opposing view to this but we've felt more comfortable forfeiting the match.

This was never a problem under are TRA 86 document which did not allow for pay period match. Now with the GUST restatment many plan's use the pay period match.

I don't see a way to determine the match forfeiture for an ADP failure if the match is done on a pay period basis other than to base it on the whole year.

[Mike Preston]

I don't disagree. Why does this cause you any concern?

[four01kman]

What's the problem? Do the forfeiture at year end. The forfeiture amount shouldn't have anything to do with the mid-year allocation. Arguably, the failure of the ADP test doesn't occur until year-end, so the forfeiture doesn't occur until year-end.

[Alf]

The match has to be returned even in a pay period match plan or else 1) the HCE gets a higer overall match rate than others which is discriminatory and 2) the plan says the match is X of deferrals and if she gets more, the plan terms are being violated.