401(k) SHNEC w/ Discretionary Match

[Guest notapensiongeek]

Calendar year 401(k) PSP w/ 3% SHNEC and discretionary match (50% up to 4% of pay). Investments are pooled. Participant became eligible 7/1/2008 but just given enrollment forms 1/1/2009. My understanding on how to calculate the corrective contributions under 2008-50 is as follows: (1) 3% of compensation for the period: 7/1/2008 - 12/31/2008, times 50%, will satisfy the "missed deferral opportunity"; and 2) 2% of 7/1/2008 - 12/31/2008 compensation to satisfy the "missed matching opportunity". Are these two statements correct?

Next, we need to adjust the corrective contributions for earnings. The trust had a loss for 2008. If we determine what the actual plan losses were, then can we simply apply that percentage for half of the year to the total corrective contribution from above? Or are there any other "simplified" methods to calculating the earnings (losses) adjustment for corrective contributions?

Any input would be greatly appreciated.

Thanks!

[Jim Chad]

I think you are on the right track in dealing with gains/losses. FWIW

However I am pretty sure you have to multiply 4% by 50% to make up for the missed deferral opportunity. I think there is an example that shows that you use the deferral rate that would receive the maximum match. I can't find the example right now, though.

[Guest notapensiongeek]

Thanks Jim!