Hardship supsension failure - impact to ADP/ACP tests

[jaemmons]

If a participant is not suspended "timely" after receipt of a harship distribution (plan uses safe harbor standards), are the deferrals and match, which are allocated during the suspension period, included in the adp/acp tests? Client is correcting this by refunding the deferrals and forfeiting the match, but this will not take place until after the plan year end being tested.

[MWeddell]

The regulations themselves tend not to tell us what happens when part of the regulations are violated.

If the failure to suspend is being corrected using an IRS correction program including the SCP, then the correction priniciple of putting both the participant and the plan in the position they would have been in but for the error indicates to me that one would exclude the impermissible contributions from the ADP / ACP test.