pay period calculation of sh match

[Guest lap716]

Hello all,

I have a plan that uses a safe harbor enhanced match, 100% of 6% of comp calculated and paid on a per pay period basis. I am doing the year end valuation and run a quick check of the match and see where the hce's are overfunded by $3000. The plan document does not call for a true up. Is the self correction to consider the excess match as ineligible and forfeit it?

[rcline46]

Correct, the match should be forfeited. If contributed in the last 12 months, it is a calculation error and may be returned as a 'mistake in fact'.

If they use a payroll service, they should be notified of their error.

[Guest lap716]

Correct, the match should be forfeited. If contributed in the last 12 months, it is a calculation error and may be returned as a 'mistake in fact'.

If they use a payroll service, they should be notified of their error.

Thank you. May I ask what would be the correct way to handle that same situation in the reverse? They underfunded the sh match and there is no true up in the document. Would you need to go back through each pay period and submit the correct match with gain or amend for a true up?

[rcline46]

I would not amend after year end for a true up. Underfunded matches are possible on a per pay basis if mis-calculated and should be fixed. However, matches on a per pay basis for participants who make high deferrals early in the year are usually 'low' when reviewed at year end, but are correct based on the document.

[K2retire]

I would not amend after year end for a true up. Underfunded matches are possible on a per pay basis if mis-calculated and should be fixed. However, matches on a per pay basis for participants who make high deferrals early in the year are usually 'low' when reviewed at year end, but are correct based on the document.

I agree and would further caution that if the per pay period match was underfunded, it may now be late and subject to lost earnings calculations.

[12AX7]

Correct, the match should be forfeited. If contributed in the last 12 months, it is a calculation error and may be returned as a 'mistake in fact'.

If they use a payroll service, they should be notified of their error.

Would this still be an option when considering the guidance in Rev. Proc. 2008-50? (Part III, Sec. 6).