Calculating earnings on excess contributions

[katieinny]

We have submitted a plan under the VCO program due to profit sharing contributions made for 2 employees who are in an ineligible class of employees. We will be transferring the contributions to an unallocated account and the ER will allocate the dollars to the remaining participants next year.

The agent would like us to address how earnings will be calculated. These individuals were eligible employees for several years, then entered an ineligible class a few years ago. Is there a generally accepted method for calculating earnings for the years the employees were not eligible. It seems impossible since the employees were diversified amoung several funds offered under the plan and had the ability to change investments periodically.

[Tom Poje]

Rev Proc 2002-47, appendix B, section 3 describes Earnings Adjustment Methods

It would seem reasonable to use any of those suggested, in particular there is under .01(3)

suggestions for (b)Multiple Investment Funds or © other simplifying assumptions

[katieinny]

Found it. Thanks for your reply.