ADP Failure and Match Contribution

[Dazednconfused]

Hi,

Plan has a fixed match formula of 50% of deferrals up to 7% of compensation. For 2009 the ADP failed, my question is do I calculate the match on the entire deferral amount (before the failure) or do I reduce the deferral amount by the distribution amount needed and calculate match?

I believe I need to calculate on the entire deferral amount that failed, then calculate match, run ACP and see if it passes and how much associated match needs to be forfeited, good times!

Also, on side note, when there is a matching forfeiture, these forfeitures only go to those that deferred for that year in the same manner as the match allocation? My system seems to allocating it to all eligible even if not deferring but it might be a spec I overlooked....or perhaps the system is smarter than me which is usually the case.... yup I am losing it already.

Thanks for the help.

[austin3515]

1) Match calced based on entire deferral.

2) Any "orphan" match must be forfeited. So if after the refund his deferrals are 6% of pay, then the match on the refunded 1% of pay must be forfeited. If by chance you are also failing the ACP test, I believe some have suggested that you can run the ACP test first, refund the excess match to the participant (subject to regular vesting), and THEN determine if any related match must be forfeited.

3) With respect to the disposition of forfeitures, you need to look at the document to see what it says. It could say many different things.