Catch up on match?

[Guest Key Lime Pie]

401k plan does not match catchup. ADP test fails with catchup recharacterization. Plan doc does not clearly say how to treat match on catchup recharacterization. Am i correct to assume first off that that newly designated catchup amount does not get matched? Then would that amount be returned to HCE's similar to ACP failure refunds?

[Tom Poje]

if catch ups are not matched, then any such match made during the year should be forfeited, not distributed.

this is no different than an ADP failure, in which match is forfeited due to the return of excess contributions. otherwise the HCE has received a match at a higher rate than the NHCEs. see last sentence of 1.414(v)-1(d)(2)(iii) in regards to catch up contributions.

(This is why, if match is made during the year it is btter to match catch-ups, so you don't have to go through this process)

[Guest Sieve]

Key Lime --

Your statement that "ADP test fails with catchup recharacterization" implies to me that the first thing you did was recharacterize a portion of all HCE deferrals as catch-ups--which is not the proper way to correct. You can only recharacterize as catch-ups those deferrals that would have to be returned under the normal ADP correction process to those age 50 and older (unless recharacterization is due to exceeding 415, 402(g) or plan deferral limits).

But, maybe I'm reading something into this that was not there. Perhaps you mean that the ADP fails and appropriate recharacterization as catch-ups is not sufficient to correct fully--i.e., there are still some deferrals that are still required to be returned even after proper recharacterization. If so, then this post is merely a misdirected diversion (certainly not my first).