402(g) violation and related match contribution

[buckaroo]

Employer A - Plan A - Participant defers 10,000 in 2011 and receives a 10,000 match (1 for 1 match)

Employer B - Plan B - Participant defers 10,000 in 2011 and is to receive a 5,000 match (.5 for 1 match)

Employers are unrelated and the participant is not catch-up eligible.

Both plans are calendar year.

Participant has a 402(g) violation of 3,500. Participant requests the 3,500 be refunded form Plan B.

Questions:

1) Is the related match to the 402(g) refund (NOT 401(a)30) in plan B in the amount of 1750 required to be refunded? If so, can someone provide a site or a passage in EOB?

2) If the match has not yet been funded, does the entire 5,000 need to be funded? Or does only 3250 need to be funded? Must the 1750 be funded and forfeited even if the refund is processed well prior to the funding of the match?

Any replies are greatly appreciated.

[ETA Consulting LLC]

You would have to compile several rules together to get where you need to be:

1) A matching contribution is not treated as forfeitable merely because the contribution to which is relates is an excess contribution (stated loosely).

2) However, after all excess contributions are distributed, you may not have a discriminatory rate of match.

From here, you can already see that if the employee is an NHCE (which is likely since he's a new hire), there is no forfeiture required.

However, you must follow the written terms of your plan. If the plan say's forfeit, then you should forfeit. However, if the plan remains silent, then you shouldn't forfeit without it being written in the plan.

If the individual is an HCE, then there is additional analysis required.

Good Luck!

[PLAN MAN]

What happens to the matching contributions if the 402(g) excess is requested after 4/15 of the following year? My understanding is if the excess amount involves two or more unrelated plans, then the distribution cannot occur until the participant has a distributable event. The plan document states that related matching contributions shall be treated as a forfeiture.

If the 402(g) excess is not distributed does the participant keep the matching contributions in their account? If the plan knows about the participant's 402(g) excess, but does not make a distribution, must the plan still forfeit the related match at the time the 402(g) excess is identified? Or is the related match forfeited at the time of the distribution? Any ideas on the best practice for this plan administration issue? Thanks.