Lost Earnings

[cpc0506]

Hello.

It is discovered that the client did not withhold salary deferral contribuitons for vacation pay period. Auditer has indicated that the client needs to make up for the missed deferrals and missed match that would have been attributable to the deferral.

We have been asked to calculate the lost earnings. The auditer states "If missed salary deferrals are related to vacation pay received during the year, someone will need to review the payroll reports to determine the date on which the vacation pay was paid. If that is too time-consuming, a safe (easy) alternative would be to calculate lost earnings on all employee deferrals from the first day of the related year". Client would like to use this 'safe harbor' date. Can I get some others feedback on this?

Also, do I need to calculate lost earnings on the Employer Match. The client usually paid the match to the accounts quarterly.