employer match off by a few dollars over under. when to make up

[Lori H]

often we see plans whose match is not exactly to the penny. this may affect a few participants who may receive $40 too much or short by $20. i believe there is a threshhold where the plan administrator has to make adjustments on the amounts. i want to say $20, but am not sure. for instance if the employer overcontributed by $15 on the match, it would not result in $15 being moved from that participants account to the forfeiture account. if an employer inadvertantly underfunded a participants match by $25, they would just make it up either by issuing a check or transfering from forfeiture account. or am i completely wrong.

[JanetM]

What does the plan doc say? Does is say the match is calculated annually? Per payroll? We have 4 K plans - three do annual true up and one matches on payroll basis with no true up. As for threshhold to correct - if the match is done annually then you need to be accurate.

Just curious, is this plan audited? Ask the auditor what is too much or too little.

[austin3515]

I'll correct anything over .10, because why not? You're cutting a check anyway. If you have a daily valued plan the investment provider shouldn't care because the data is via spreadsheet, etc.

[Lori H]

plan is audited and match is calculated on a payroll by payroll basis. sometimes miscalculations can be due to rounding, payroll glitch, etc. seems i saw something in IRC awhile back that if participants match was over/underfunded by specific amount($15?) you were required to make adjustment.

[austin3515]

I think your thinking of the correction programs. I wouldn't get involved with those rules unless you had a problem. What your talking about is routine plan administration, and you should try to follow your document to a very close degree to stay out of trouble. That includes an annual true-up.

I'd set the bar real low to avoid benefit rights and features problems (i.e., HCE's will likely have the largest adjustments).

[WDIK]

That includes an annual true-up.

Not applicable, Lori said...

...match is calculated on a payroll by payroll basis.

JanetM already pointed out that if the match is calculated based on each pay period, no corrections should be made.

If the match is simply incorrect, appropriate measures should be taken. Why not base your personal threshhold on whatever amount you are willing to defend on IRS/DOL audit? Or in this specific case, since the plan filing requires an accompanying audit (at least that is what I assume Lori meant in her last post) you could base your conclusion on the auditor's requirement.

I would also take note of Austin3515's final sentence.

[austin3515]

I should've been more clear that my answer is based on the assumption that the doc. says the match is based on annual data, not pay-period data.

[Guest Midas]

Administratively, we set a threshold of $10.