Over-contribution of Match--correction

[BG5150]

We have several people who received too much match (per the formula) in 2014. Quick fix is to remove the excess amount from the partiicpants' accounts and have the plan administrator use the proceeds to fund future ER cotnribuitons.

In the past, I would include earnings in the amount removed. Someone is now questioning that method. Is there anything that requires me to include investment experience along with the over-match amount?

The only thing I can point to is the general correction principle of EPCRS that the plan be put in the position it would have had the error not occurred.

Is there anything specific that details what is to be done in this case? EPCRS seems to address mostly under-contributions or overpayment of distributions. Did I miss something there? Should I turn my attentions elsewhere?

[QDROphile]

What more do you need as long as there is nothing contrary? Also consider that you and the participant would want to reduce the excess net of negative earnings, so you should be consistent and reduce the account by the positive earnings on the excess.

[ESOP Guy]

In the past, I would include earnings in the amount removed. Someone is now questioning that method. Is there anything that requires me to include investment experience along with the over-match amount?

I am trying to figure out what the difference between "earnings" and "investment experience" is.

Is earnings using the DOL rate and investment experience the actual earnings?

If so, I would think in this case you would use actual earnings.

[BG5150]

I used "investment experience" as a synonym for earnings as to avoind being repetitive.

My question boils down to this:

When correcting this type of mistake, is it mandated anywhere that you must include the earnings in the correction, other than 6.02 of EPCRS where it says that the plan be put in the position it would have had the error not occurred?

[rcline46]

Why bother? Have the person challenging you, even if in your company, provide the cite to back up their position.

[BG5150]

I there is nothing to say remove funds with earnigns, why do so?

[QDROphile]

Because it is not good faith compliance with the SCP guidance to disregard a pretty clear interpretation as applied to the circumstances and the IRS is sensitive to disguised contributions.