SH Match True-Up

[khn]

A plan has the following elections in the adoption agreement:

- Employer elects to match actual elective deferrals made on a payroll basis.

- The employer elects to true up safe harbor matching contributions made to the plan on the above basis.

The Matching Formula is: Matching contributions will be made on behalf of participants in an amount equal to 100% of the amount of the eligible participant's elective deferrals that do not exceed 3% of compensation and 50% of the amount of the participant's elective deferrals that exceed 2% of the participant's compensation but that do not exceed 4% of the participant's compensation

In the case of a participant who had a hardship withdrawal and was not eligible to contribute for 6 months of the year, how is this to be handled? The rk is calculating the match and says the participant's true-up needs to be calculated based on his total compensation for the entire year. That doesn't seem right since he wasn't eligible to contribute for the first 6 months. Can anyone shed any light?

[Jim Chad]

IMNTBHO A "suspension" is not quite the same as "not eligible" . I would count the whole years comp. What do others think?

[401king]

We view the suspension the same way as ceasing deferrals. The compensation is still eligible.

[austin3515]

Its definitely part of the calculation. To be excluded you would have to see something in the plans definition of compensation excluding "comp paid during the period of a hardship suspension" which you are not going to find.

[khn]

Ah, got it...the participant is ineligible to contribute during the suspension, not the compensation. Thanks to all.