Excess Annual Additions

[nancy]

A participant is covered under a MP and 401(k) plan. The sum of her MP + Deferrals + Match is greater than $30,000. The 401(k) plan document provides that deferrals may be returned to satisfy 415. What happens to the match associated with the return? Is it forfeited? reallocated? They are failing the ACP test and will make a QMAC.

Another alternative would be to prorate the correction between deferral and match. The excess match would then be used to reduce her matching contribution for the next year.

Any help is appreciated.

[Guest]

I believe you prorate 'return' between deferral and match.

thus distribute deferral + gains to participant and follow plan document how to handle match. If plan allows excess 415 amounts to be reallocated to others, I am guessing that you could use it as a QMAC

[Kirk Maldonado]

I believe that the regs say that you refund the employee's contributions (and the earnings on those amounts) first, but I didn't check the regulations to verify whether or not my memory is correct.