Forfeiture of Matching Contribution associated with Refunded Deferrals

[Guest Grumpy455]

A 401(k) plan fails the ADP test, but passes the ACP test. Under the ADP test, HCE1 must receive a refund of $5,000. Associated with that deferral is a matching contribution of $1,000. Does the $1,000 matching contribution associated with the $5,000 refunded deferral have to be forfeited? If so, can anyone provide a citation? Thanks!!!

[Tom Poje]

the actual answer is no, but if you dont big momma could disqualify your plan.

check your document and see what it says.

if related match contributions are not forfeited, then the rate of match for the HCEs will be greater than the rate for NHCEs. this is a discrimination failure.

one option available is to make a corrective amendment to increase matching contribution to the nhces. see 1.401(a)(4)-11(g) there is an example.

I suspect if the document is worth its weight it will require related match $ to be forfeited.

[Guest Grumpy455]

Thanks, Tom. I appreciate your answer--it was very helpful.

[WDIK]

big momma

????

I'm heard of the founding fathers, Uncle Sam, Big Brother and even Aunt Jemima, but am uncertain how this new relation fits in.