MBCarey Posted January 13, 2011 Posted January 13, 2011 We have a plan that allows immediate entry into the plan for making deferrals. However, there is a one year wait to receive the match. They have two participants who entered the plan and begin making deferrals on 6/1/2010. The employer also made matching contributions to the individuals immediately rather than waiting until they were eligible. How should this be corrected? The employer wants to stop making matching contributions for the two individuals until such time as they are eligible, leave the money in the participant's match account using it to offset the future match. My feeling is that the match should be forfeited? What is the correct way to handle this?
BG5150 Posted January 13, 2011 Posted January 13, 2011 I'd forfeit it. Or, more properly, remove the contributions (with a negative contribution or canceling the original transaction) plus earnings and put it into a suspense account. Otherwise, when you run your reports, you will show the bad amounts as matching contributions, and a forfeiture amount that wasn't really a forfeiture. It'll really be a mess if you do it cross plan years. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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